Drawdown
The decline from a peak balance to a subsequent low point.
Full Definition
Drawdown measures the peak-to-trough decline in your account balance or equity, expressed as a percentage. A 20 percent drawdown means your account dropped from its highest point by 20 percent before recovering. Maximum drawdown indicates the worst-case historical decline over a given period and is one of the most important risk metrics to evaluate before committing to any strategy.
There are two commonly tracked drawdown measures. Balance drawdown is based on closed trade P&L only, while equity drawdown includes floating (unrealized) losses on open positions. Equity drawdown is almost always larger because it captures intra-trade volatility that never shows in balance history. Professional strategies publish both numbers so traders can see the true risk profile, not just the smoothed closed-trade view.
For example, if your account peaked at $10,000 and dropped to $7,500 before recovering, your maximum drawdown was 25 percent. To fully recover from a 25 percent drawdown requires a 33 percent gain, not 25 percent. The asymmetry between losses and required recovery grows quickly at deeper drawdowns: a 50 percent drawdown requires a 100 percent gain to break even. This math is why capping drawdown is a central goal of risk management.
In copy trading, drawdown is the single most important metric for deciding whether a strategy is survivable. SteadyFlowFX publishes a verified 34.2% maximum drawdown on Myfxbook — subscribers can use this figure to size their account knowing the worst historical peak-to-trough decline. Any copy service that withholds real drawdown numbers is hiding the true risk behind high headline returns.