I have a question about MDD (maximum drawdown). If my system generates a signal for a security and you initiate a position (either long or short) in that security, if the security keeps on moving in the direction that is favorable to your position, how do you calculate the MDD? Will the MDD be negative or positive? My guess is that it would be positive because the valley point is the initial postion. And positive MDDs are good. Am I right? The next question is how useful is MDD if you have a predetermined stop loss in place? Since your stop loss gets hit before the maximum draw down is encountered (and hopefully your system generates another signal to move in the reversed direction to take advantage of the changed direction), what is the use of MDD in this case? Or is MDD only useful to determine the risk of a security? If so, are we not better off using standard deviation? If I am wrong in any of my suppositions, please let me know followed by detailed explanation. Thanks.