Drawdown

Risk Management

How much your account has dropped from its highest point. The peak-to-trough decline in account value. A 20% drawdown means if your account hit $100,000, it's now worth $80,000. Managing drawdowns is crucial for psychological sustainability. Example: Your account grew to $50,000 and is now $40,000 - that's a 20% drawdown. Even if you're still up overall, the 'loss' from peak feels painful and can trigger emotional trading.