Are you particularly good at buying tops and selling bottoms while being terrible at math? Then here's your solution: A basic script that automatically calculates and plots the drawdown between the highest high (or open/close) and the current price. Best used on the higher time frames (so you can easily see where the "top is derived from". If it's used on an...
I needed to see what the max Drawdown was for a specific security, and so I wrote this script. Maybe others might also find it useful. Here I apply it to the Russel 2000 index. The Russel 2000 index has been gone down quite consistently recently. So someone might wonder how weird is that, and from this index you can see that we are still a long way before the bottom.
This indicator was described by Peter G. Martin and Byron B. McCann in their book "The Investor's Guide to Fidelity Funds" (1989).