Glossary › drawdown
Trading glossary · risk
drawdown
How far your money has dropped from its highest point before it climbs back to a new high.
The fuller meaning
The fall from an equity peak to a later low, in percent: (peak − low) ÷ peak. Losing streaks make drawdowns normal even for good methods; risk per trade sets their depth, and deep drawdowns need much bigger gains to recover, since a 50% loss needs a 100% gain.
drawdown.
Related words
1% rule · ATR stop · average loss · average win · breakeven · breakeven win rate · correlation · daily loss limit · equity curve · exposure