Forecast for Quotes contest: predict a rate change and win a monetary prize from LiteFinance!

Parameters of accounts taking part in BEST OF THE BEST contest

Profitability

Profitability is computed using the following formula:

P = (Equity - Balance_start) / Balance_start * 100 (%), where:

Equity – current account’s equity;

Balance_start – initial account’s balance ($5000).

Maximum deposit utilization rate

The maximum deposit utilization rate is the highest possible value of an account’s deposit utilization rate during the contest.

Deposit utilization rate is a percentage of an account’s equity used as a margin for opened orders.

It’s calculated using the formula :

Margin / Equity * 100(%), where:

Margin – a deposit amount required to open a position;

Equity – a current account’s equity.

Maximal relative drawdown

Maximal relative drawdown shows a percentage of losses in an account.

It’s calculated using the formula :

Max ((MaximalPeak - NextMinimalPeak) / (MaximalPeak + 100) * 100) (%), where:

Max — the highest relative drawdown value;

MaximalPeak — the upper extremum value corresponding to Max in the profitability chart;

NextMinimalPeak — the lower extremum value following MaximalPeak in the profitability chart.

Example of relative drawdown calculation for the chart above:

Let’s estimate the extremums of the profitability chart ("H" for the highest and “L" for the lowest)

H1 = 80%, L1= 50%;

H2 = 90%, L2 = 35%;

H3 = 135%, L3 = 40%;

H4= 195%, L4 = 65%.

Relative drawdown values are calculated as follows:

PercentDrawDown1 = (H1 - L1) / (H1 + 100) * 100 = (80 - 50) / (80 + 100) x 100 = 16,67%

PercentDrawDown2 = (H2 - L2) / (H2 + 100) * 100 = (90 - 35) / (90 + 100) x 100 = 28,95%

PercentDrawDown3 = (H3 - L3) / (H3 + 100) * 100 = (135 - 40) / (135 + 100) x 100 = 40,43%

PercentDrawDown4 = (H4 - L4) / (H4 + 100) * 100 = (195 - 65) / (195 + 100) x 100 = 44,07%

MaxRelativeDrawdown = 44,07%

Leverage

Leverage is a ratio between the deposit and borrowed funds. Credit leverage 1:400 means that you need to have in your trading account an amount which is 400 times less than the one required to open an order.

Risk

Risk ratio depends on the trading history and is calculated automatically based on the following parameters (weight factor is indicated for each parameter):

1. 1. Maximal relative drawdown (weight factor 0,5)
2. 2. Maximum deposit utilization rate (weight factor 0,3)
3. 3. Leverage (weight factor 0,1)
4. 4. Account lifespan (weight factor 0,1)

Each of the parameters above has its own scale from 1 to 10 points and its own weight in the final risk estimation. The total Risk ratio is measured in values rounded to the nearest whole number.

Thus, the total Risk ratio is determined by summing up points for each parameter multiplied by its own weight factor.

Risk = Points of Maximal relative drawdown * 0,5 + Points of Maximal deposit utilization rate * 0,3 + Points of Leverage * 0,1 + Points of Account lifespan * 0,1

1. Maximal relative drawdown (weight factor 0,5)

2. Maximum deposit utilization rate (weight factor 0,3)

3. Leverage (weight factor 0,1)

4. Account lifespan (weight factor 0,1)

Preset value is 10 points.

Example:

Let’s say an account had the following parameters and points (without considering weight factors):

Maximal relative drawdown: 22,5% = 5 points;

Maximum deposit utilization rate: 11,32% = 3 points;

Leverage: 1:400 = 10 points;

Account lifespan = 10 points;

So, the Risk ratio with weight factors considered shall be calculated as follows:

Risk = 5 * 0,5 + 3 * 0,3 + 10 * 0,1 + 10 * 0,1 = 5,4 ≈ 5