Ads end in 20 seconds
This content is free thanks to our sponsors
Sponsored Ad – I may earn a commission if you click and buy
Investment
Drawdown
The peak-to-trough decline in your trading account — how much you lose from your highest point.
Maximum drawdown is one of the most important performance statistics. Good traders keep maximum drawdown below 20–25%. Managing drawdown is more important than chasing high returns for long-term survival.
It's the biggest hole your account falls into during a bad period — the deeper the hole, the scarier the ride.
Real world: A trader’s account reaches £25,000 then drops to £18,000 during a bad streak. The drawdown is £7,000 or 28%. Large drawdowns cause emotional stress and can force traders to quit.
💡 Controlling drawdown is what lets you stay in the game long enough to win big.