How is drawdown per trade calculated on accounts that use margin (ie forex/futures)?
Is it the percent of margin used of the total account value? Or is it the percent of total loss?
If I see a trade having 96% DD, does this mean that the trade used 96% of the margin or that the loss is 96% of the account value?
for example: Lets say you have an account value of $1000, and entered a NZD/USD a trade that used $250 margin.
The trade had then went to $300 dollar loss and used all $1000 margin (and therefore was automatically closed at IB). However the trade then lost more at $500 with $2000 margin used.
In this example - is the DD = $1000 margin / $1000 account value = 100% (but only $300 loss) OR is it ( $500 loss) / ($1000 account value) = $50%. (even though youd be out of the trade beforehand due to margin call).
I tried searching the forums for an answer but had no luck. Thanks.
