Confused about drawdown

Hey all

What exactly does drawdown refer to and how do I calculate the real DD%.

I'm running the Beastie EA and on a 5k demo I've seen it down 700 dollars (I'm testing using high lots)

so that should be about 12% drawdown but if I generate a Detailed Statement in MT4 it says the drawdown is only 2%

Is max drawdown not the highest amount of money your open trades has lost?

EDIT:
Forgot to mention I was already up 500, so about 10%. So drawdown must mean how deep into your initial deposit you go?

There are 3 types of drawdown in MetaTrader. They can all be equal but can also be different - depends on circumstances:

1. Absolute Drawdown - it's the max drop below your initial balance. E.g. you had 5k deposit, and the minimum level you've been down was 4.5k, then absolute drawdown would be 500 for you.

2. Maximal Drawdown - the maximum drawdown in the dollar (or other currency) terms. It's calculated as the deepest fall in your balance curve. For example, you were lucky and your balance rose to 8k, then it fell to 6k and then started rising again, then maximal drawdown would be 2k.

3. Relative Drawdown - the maximum drawdown in term of the balance percentage. It's almost the same the the Maximal Drawdown, but the maximum percentage fall is considered instead of the maximum dollar fall. For example, as before you've been up to 8k then down to 6k and then started rising. Your Maximal Drawdown currently is 2k and your Relative Drawdown is 25%. Then your balance rose to 14k and fell to 11k. Your Maximal Drawdown becomes 3k, but your Relative Drawdow remains 25% as 3k would only 21.4% of your 14k balance.