Basically FuturesUnderstand it
Drawdown is the decline from a prior equity peak to a later trough. Losing streaks and large losses can produce substantial drawdowns even in strategies that showed positive historical expectancy. Bet sizing magnifies the impact. Distinguish dollar drawdown from percentage drawdown and from a daily stop. Simulations can help examine paths but depend entirely on assumed distributions.
An account grows from $10,000 to $12,000 and then falls to $9,000. Its peak-to-trough dollar drawdown is $3,000, or 25% from the peak—not 10% from starting balance.
Watch for this misconception
Comparing a simulated probability to a guarantee of what your account will do.
Use the drawdown simulator to compare 0.5% and 2% hypothetical risk-per-trade, with the same outcome assumptions.
Risk and expectancy tools ↗What balance is used to calculate conventional peak-to-trough drawdown?
Check the sources
Hypothetical educational examples. Verify current product specifications and rules before making decisions.