Drawdown
The decline of an account from its peak to its lowest point, in percent or amount. Maximum drawdown shows a strategy's worst period and the limit of psychological endurance.
Recovering a 20% drawdown takes a 25% gain, and recovering a 50% drawdown takes a 100% gain; the math is asymmetric. That's why avoiding large drawdowns matters more than chasing large gains.
At prop firms, the "total drawdown" limit can be fixed (measured from the starting balance) or trailing (measured from the peak); the trailing kind is much stricter.
Related terms
Where it appears in the guides
Guides whose text uses this term; most frequent first.
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- Çoklu zaman dilimi analiziTechnical analysis
- Drawdown yönetimi: kayıp serilerinden çıkışRisk & money management
- Değerlendirme aşamaları: 1-2-3 adım ve instant fundingProp firm processes