Although I respect your right to mean what you like by drawdown I don't think your version of it here is as worthwhile as the one (I believe) Duritz has already employed - and I'll explain why.
Your figure is certainly your worst point of the period but when testing a system and not wanting to blow the bank you need to have a handle on the worst case scenario. If you had started the system at the end of the first month when in your example you were $500 in profit your maximum loss would be the difference between $500 positive and your lowest point. When testing a system you need to know what is the worst performance from a previous highest point to a following lowest point to cater for that dreaded run of outs - which may come right at the start of the betting cycle.
I'm going to stop now because as Iomaca pointed out, all this talk of runs of outs is beginning to make me feel tense.
KV

Hi Kenny,

I was just pointing out how to do a general draw-down chart that can be applied to anything as used by stock markets and most businesses, especially large ones. They can be used for all sorts of things including any form of betting or race info. progress.

However [don't we just cringe at that word:-)], what you are describing is a theoretical model approach which can only be based on someone else's figures. How do we know they never started on the system just after an even bigger draw-down than their figures eventually show? Simple, we don't know.

Some theoretical value is there sure, but that's all. It might show max. draw-down for the last 10yrs. but the next 12 months might show a bigger one. You might start into a system at the end of a big draw-down month only to immediately fall into an even bigger one straight away.

You can't 'start a system at the end of it's first month'. When you start it is the first day surely[?].

I've avoided talking about runs of outs, but I've ended up with month's and periods. Why is punting obsessed with bodily functions?

The proof is in the punting
 

Indeed...

You're right about not knowing at what part of a system's results we enter, whether it be at the end of a bad run, middle of one, in a "normal" period (almost a completely irrelevant word, normal, when it comes to punting), or in a profitable period.

However, (there's that word again) in the absence of going back to the start of racing in Australia, and therefore the TRUE beginning of every system ever built on Australian racing, we must start somewhere. And if we start far enough back, where we entered becomes less relevant because the results since begin to stack up on their own. If, for example, I went back 10 years with this system (in a couple of months from now I'll be able to do that - without a time machine too) then it would be of little relevance at all at what point I entered, because the results since add enough info as they are.

For now, for this system, (which I started punting yesterday, 15 bets total for the day, profit of 3.3 units, pleased of course), I think a 1% increasing/reducing (weekly recalculation) of total bank is safe enough without being too wimpy - in the test period I'd have lost 58% of my bank in the worst period, but at the end of the two years ended up well in front.

Personally, I don't think two years worth of data and 6000 bets are enough. When I can, I will test this system over the last ten years, break down the results year by year, month by month, and if it wins every year, I'll start to engage the inflate-ometer on my noggin.

But, of course, as always the proof comes in the pudding, or in this case, the punting, actually outlaying the money, keeping the records, tracking the results, and - importantly - getting a "feel" for it. I am looking forward to seeing how this is going after one month, then two, see if I can get in front (have the POT figure in the Excel sheet where I'm recording the info permanently in conditionally formatted BLACK rather than RED), get the "lead" on the method and maintain it.

Good most Duritz. However [:-)], just remember these words uttered by many a pro. and punting experts all over the world. One of the biggest loss factors next to stupidity, is over-caution. Don't get too carried away with 'testing', jump in when a profit is there with reasonable expectation. It's called 'gambling'. Go for it or the profit can just as easily pass you by and turn pear-shaped!!!

Yeah that's a good point. I like profit, it's made it last two years, so I've put aside a bank for it, am punting it. After two days, 20 bets total, 2 bets in front.

OK here's a month by month breakdown of that system, in "bets" profit or loss, if you think of it as $1 on each then it's how much won or lost per month level staking this system, $1 on each, over the last two years. The months are combined, ie Jan 04 and Jan 05 totalled, etc:

Jan -39
Feb -19
Mar +107
Apr -21
May +98
June -40
July -26
Aug +31
Sep +108
Oct +2
Nov +134
Dec +83

Total = +417 over the 5800 odd bets.

I would have loved to have seen each month in profit. This hasn't happened. In fact, it's very volatile.

I'm not a big one on stats and trends etc, but given that this method is averaging about 240 bets a month and is overall showing nice profit, is it odd that it is so volatile month to month? It has won six of the months, and LOST six of the months. 50% of the months LOST.

Should I be concerned?

Good for you mate. I think you are a first [besides me] for ever admitting a loss for any month. Didn't you know there are no losers on this forum? Get with the program !!!

lol yeah we're all billionaires, no really. No-one LOSES!!

That six months losing, six months winning bit all seems pretty hit and miss to me though. I would have thought a system with a large number of bets and a healthy POT would win 75%+ months..... do you think there's cause for alarm? (said one bank robber to another)

Hi Duritz!
Did you, or can you break your stats down by weekly results?
Losing for a whole month is a bit more than I could stand but if you win two or three weeks in a month and lose the lot the rest of the time, that's a different matter.
The fact that your system is in profit, means you are doing something right, but you must find out the reason for the losing sequences, in my opinion they are far too long. Never will make it winning ALL the time. I know you said stats aren't your forte, but I'm afraid it is your only answer, and with a system, or rating like yours, it is well worth the time and effort.
Good luck

As a sadder but wiser person I would say yes.
I thought I had a great quinella system going. It averaged about 14% Profit on turnover over a period of 10 years betting on probably a third to a half of the races on offer. I watched it for two months not spending any money and it was almost embarrassingly successful. That was up to November last year. I started putting money into it in December and by early January I had lost my nerve and half my bank it lost so badly. It was a very volatile system too. I followed it up to the start of March and it lost consistently week to week so I lost interest. I actually started watching it again last weekend and it ran at 100% profit both days of the weekend and just in front today.
I should have done my stats a bit more thoroughly but I was lulled into a false sense of security by a couple of great months when I happened to start live testing.
Maybe half way between Crash's "Get into it before it falls over" and Marcus's "You must find out why it has losing sequences" there is some ground your comfortable with.

Don't know why I wrote all that - it's all waffle really. Sorry mate, you'll have to make your own mind up.

KV