Usually measured in % terms, drawdown tells you how much your equity declined from its peak value.įor example – You buy one stock at $100 and your first trade gave you a 20% profit.
Although this metric is readily available in most of the modern backtesting tools, yet having it in Excel is going to add a lot of values for newbies.Īlso Read: How to plot a candlestick chart in an Excel Sheet? Understanding Drawdowns In this post, we’ll learn how to calculate drawdown in an excel sheet. A drawdown measures the peak to trough decline of your equity value during a specific period of time. Drawdown is one of the most important measures for evaluating trading systems.
