Measuring Your Risk
Max Drawdown is the ultimate measure of risk for your trading period. It shows the largest single drop your account experienced from its highest point (a peak) down to its lowest point (a trough) before a new peak was achieved.
Why It Matters
A high drawdown, even on a profitable account, can indicate that the strategy is very risky and could lead to significant losses. Understanding your max drawdown helps you manage your risk and determine if you can emotionally handle the swings of your strategy.
💡 We show both the total dollar amount of the drawdown and what percentage of your peak equity that drop represented.