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GUIDE
Drawdown explained: reading a strategy record beyond the winning trades
A strategy's total return tells you where it ended up. Drawdown tells you how painful the road was — and how painful it could be for you. If you only look at one number before copying a strategy, make it the drawdown.
What drawdown means
Drawdown is the fall in account value from a previous peak, usually shown as a percentage. If an account grows to $1,200 and then falls to $900, that is a 25% drawdown from the peak.
Why recovery is harder than the loss
| Loss | Gain needed to get back |
|---|---|
| 10% | 11.1% |
| 20% | 25% |
| 30% | 42.9% |
| 50% | 100% |
Arithmetic illustration only. Not a forecast or a loss limit.
Balance vs equity
Balance counts only closed trades. Equity includes the profit or loss on trades that are still open. A strategy can show a rising balance while equity is deep underwater because losing positions are being held open. Always check equity and open positions.
Four things to check on any strategy record
- Current equity — what the account is worth right now.
- Maximum drawdown — the deepest fall, and how long recovery took.
- Length of the record — months of history, including losing periods, not a selected winning streak.
- What's still at risk — open trades, fees, and whether deposits or withdrawals distort the return.
You can review the TradeVolumes record, including drawdowns, on the broker's strategy page via the record section.
Frequently asked questions
What is a good maximum drawdown?
There is no safe number. Compare drawdown with the return earned and with how much loss you personally can tolerate, and assume future drawdowns may be larger.
Why does a 50% loss need a 100% gain to recover?
Because the gain is calculated on the smaller remaining balance: $1,000 falling to $500 must double to return to $1,000.
Does a low drawdown mean a strategy is safe?
No. Some methods keep drawdown low for long periods and then lose heavily. Check open positions and how losses are controlled.
Educational content, not investment advice. Leveraged Forex and CFD trading involves a high risk of loss; you can lose your entire trading balance. Past performance does not guarantee future results. TradeVolumes may receive affiliate compensation and a 25% performance fee if you copy its strategy.