Log in Open account

Costs & risk

Drawdown

Drawdown is the fall in an account's value from a peak to a later low, usually shown as a percentage. Maximum drawdown is the largest such fall over a period.

Also called: max drawdown, maximum drawdown, peak-to-trough decline

Hypothetical example

Hypothetically, an account grows to $1,200 and then falls to $900: a drawdown of $300, or 25% of the peak. It would need to gain about 33% from $900 to get back to $1,200.

Used in these guides

Costs & risk8 min read
Position sizing: how to work out how many lots to trade
A step-by-step method for setting the size of a trade from the amount you are prepared to lose, your stop loss and pip value.

Back to the glossary