**Money.nikaniku.com – Get to Know More about the Three Types of Drawdown**. In the exchanging portfolio, we often get articulation reports about the results of our exchanging transactions within a certain period of time. Usually dealers pay attention to net benefits, development benefits and drawdowns. Currently inforexnews will discuss the drawdown. Because before making an investment, we are usually advised to look at the drawdown figure. What exactly is a drawdown?

In simple terms the drawdown is how much consecutive losses you may have in your exchange. Drawdown itself consists of 3 types, namely outright drawdown, maximum drawdown. And relative drawdown.

Drawdown is useful for those of you who often hear a dealer say I have 80% accuracy in every 100 transactions. The question is what if 20% of transaction errors occur in a row at the start? Is the amount of the dealer’s modular drop large? Or even not leaving the modular? So the drawdown is very much tied to how we use financial management in transactions correctly. Accuracy is just an accuracy.

**Let’s briefly discuss these three types of drawdowns:**

## Outright DRAWDOWN

Outright Drawdown is the amount of initial loss that eats up the modular.

For example, you make a transaction on your new account, and you immediately get a loss first. Regardless after that you get a profit. But unfortunately these losses have eroded your modular first.

Let’s look at an example for example your initial modular is $1000. After you make a transaction, your loss before making a profit is $300, so the Absolute Drawdown of your exchanging account is 300.

### MAXIMAL DRAWDOWN

Maximum Drawdown is the maximum percentage of decline from the initial modular after deducting losses from several consecutive exchanges.

for example you open a new account and do store $ 3000. But unfortunately instead of getting a profit, you actually make a losing transaction in a row. After the losing streak. Your absolute misfortune is $900. And your total remaining is $1100. So your maximum drawdown is the absolute loss of $900/$3000 = 30%

Maximal drawdown is the thing that is often noticed by merchants and financial backers. You can project whether your exchanging results with the current cash the board will make your exchanging account at the edge call level or not. The bigger your maximum drawdown. Then the greater the chance you have an edge call.

## RELATIVE DRAWDOWN

While the Relative Drawdown does not describe the actual risk because it is temporary. In essence, Relative Drawdown takes the ratio of the benefit value and the drifting value, so this Relative Drawdown can detect whether your exchange system is superior in terms of benefits or floating.

**Example**: Capital 10000, when your transaction is drifting benefit $400, it means your value becomes $1500 and then drifting less $200. The Relative Drawdown calculation formula is as follows.

**relative drawdown** = [(1000+400) – (1000-200)]/(1000+400) x 100

= ([1400 – 800)/1400] x 100

**relative drawdown** = 42.86%

After knowing the type of drawdown above, it can be concluded that the maximum drawdown is the number we pay the most attention to because it is the maximum drawdown that gives us a projection about the safety of our funds in our portfolio.

What is the maximum number of Maximal drawdown that is considered good?

There are no exact figures. It all depends on the merchant’s exchanging system. Because sometimes merchants whose portfolios have large drawdowns can get big development because they use a compounding system. But by more carefully assessing the maximum drawdown, you can avoid inappropriate investments. The smaller the drawdown number of a portfolio, then you can keep the money store safe from edge calls.