The University of South Carolina (also referred to as USC, SC, South Carolina, or simply Carolina) is a public, co-educational research university located in Columbia, South Carolina, United States, with seven satellite campuses.
What is a 'Drawdown' A drawdown is the peak-to-trough decline during a specific recorded period of an investment, fund or commodity. A drawdown is usually quoted as the percentage between the peak and the subsequent trough. Those tracking the entity measure from the time a retrenchment begins to when it reaches a new high. BREAKING DOWN 'Drawdown' This drawdown method of recording is useful because a valley can't be measured until a new high occurs.
The drawdown (at least according to Wikipedia), saves a peak's value, and for every value later which is lower than the value of the peak, calculated: $DD = {(peak - value) \over peak}$. The problem arises when the first peak of the trading strategy is of value 0. That forces me to divide by 0. For backtesting purposes, I always assume the net value of the robot is 0, and from that point on it makes profits or losses. Other assumptions may solve the problem, but arbitrarily; different decisions for initial value will lead to different drawdown calculation results.