Understanding Drawdown

Drawdown measures the peak-to-trough decline in account equity during a specific period. It shows the maximum loss an account experienced before recovering. Drawdown is expressed as a percentage -- a 20% drawdown means the account fell 20% from its highest point.

Types of Drawdown

Absolute Drawdown: difference between initial deposit and minimum equity. Maximum Drawdown: largest peak-to-trough decline. Relative Drawdown: maximum drawdown as