What is Drawdown in Forex?

Last updated: 2026 | FxRobotEasy Research Team

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 a percentage of

the

peak

equity.

Maximum drawdown is

the

most

commonly

used

metric

for

evaluating

trading

systems.

What is Acceptable Drawdown?

Conservative strategies: under 10%. Moderate strategies: 10-20%. Aggressive strategies: 20-30%. Anything above 30% is considered high risk. Remember: a 50% drawdown requires a 100% gain to recover, and a 70% drawdown needs a 233% gain.