eToro MaxDD Software
This program allows you to identify with a simple click the maximum DrawDown on the entire operating history of the investor (not the one shown by eToro divided by week, month or year).
Specifically, you can find:
|The Absolute Maximum DrawDown, calculated as a percentage on the entire investor’s history;|
|The Average Drawdown, always calculated as a percentage on the entire investor’s history;|
|the specific Max Drawdown always calculated as a percentage on the entire investor’s history;|
It’s a program for the identification of a core value, which in the eToro statistics section is calculated per week, month and year.
With our program you can to identify a much more real and reliable DrawDown value, calculated by adding up all the monthly performances of the investor. The tool also provides a graphical illustration of the equity line performance.
You can then make the necessary assessments and decide what capital is better to allocate to the investor for replicating his operations.
Analyzing the Drawdown for better investing
As we profess since a long time, to make a capital bear its fruit you first need not to lose it. For this reason, in our view, the first thing to consider when investing is the capital protection. Once you are reasonably certain you have secured your capital, the rest will follow easily.
A fundamental role in assessing the risk of a Popular investor’s strategy is definitely the determination of his worst historical moment.
Although a past performance is no guarantee of future performance, it’s also true that, if the Trader will continue to operate using the same strategy with which he achieved the results that attracted you, a long enough historical operations list is the only thing at your disposal to make analytical considerations.
The problem (known for some time now to the InvestinGoal users, but not yet known to many others) is that the calculation of the Max DrawDown made by eToro, most of the times, is not trusted.
Then, basing your analysis only on the Max Drawdown value that eToro provides in the investor’s profile, you will miss one of the most important elements in determining the risk index of the trader.
In fact, the Max Drawdown is crucial especially when you’ll have to choose the amount of capital to be allocated to an investor for the Copy Trading activities, so you can replicate him without jeopardizing the security of your account.
You can find more details on this in the chapter The eToro Drawdown.