What Is Maximum Drawdown and Why It Matters

Maximum Drawdown (MDD) is the largest percentage decline your account experienced from a prior peak. Even if the final result is positive, if the equity curve dipped 40% below a previous high at some point, your MDD is 40%.

A +50% return achieved through slow, steady gains and a +50% return that included a dip to -60% along the way are completely different risk profiles. A strategy with a large MDD is far more likely to have gotten liquidated or psychologically abandoned during that drawdown.

If you keep logging your balance after each trade, the dashboard’s equity curve lets you see MDD visually. Don’t just look at the return — build the habit of also looking at how deep that curve dipped before it climbed back.