What is maximum drawdown?Max Drawdown
The biggest drop from an equity peak to the lowest point that follows.
Animation · maximum drawdown
Learn “maximum drawdown” in an animated lesson
- Quant BasicsBuilding Strategies from Rule Blocks
Turn "gut feel" into rules: buy when one condition is true, sell when another is. Snap a few blocks together and let historical prices give you the answer.
- Risk Management & Trading PsychologyDrawdowns Are Lopsided: Lose 50%, Need 100%
Going from $100 to $50 is a 50% loss, but getting from $50 back to $100 takes a 100% gain. The deeper the loss, the harder the climb out.
- Risk Management & Trading PsychologyLosing Streaks and the Risk of Ruin
The same profitable strategy can produce wildly different equity curves with different luck. Use a Monte Carlo simulation to run hundreds of possible futures and see how bad it can get.
- Indicators in Practice & BacktestingBacktesting a Moving Average Strategy
Test your rules against historical data: return, win rate and maximum drawdown, and you can't skip any of them.
- Indicators in Practice & BacktestingPosition Sizing and ATR Stops
Even the best signals lose sometimes. Deciding how much to lose per trade matters more than finding the perfect signal.
Related terms
See how “maximum drawdown” works for yourself with an animation you can drag and play.
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