[{"data":1,"prerenderedAt":1348},["ShallowReactive",2],{"\u002Fglossary\u002Fwhat-is-a-daily-drawdown-limit":3,"\u002Fglossary\u002Fwhat-is-a-daily-drawdown-limit-related":254},{"id":4,"title":5,"body":6,"category":238,"date":239,"description":240,"draft":241,"extension":242,"meta":243,"navigation":241,"path":244,"related":245,"seo":250,"stem":251,"term":252,"updated":239,"__hash__":253},"glossary\u002F5.glossary\u002Fwhat-is-a-daily-drawdown-limit.md","What Is a Daily Drawdown Limit? Rules and Reset Times",{"type":7,"value":8,"toc":230},"minimark",[9,24,29,40,43,50,56,62,65,73,77,80,88,92,107,110,125,140,144,147,184,187,191,222],[10,11,12,13,18,19,23],"p",{},"A daily drawdown limit caps how much an account may lose within a single trading day, measured from a reference set at the start of that day. It is the standard risk control in ",[14,15,17],"a",{"href":16},"\u002Fglossary\u002Fwhat-is-a-prop-firm","proprietary trading firm"," agreements, enforced automatically: breach it by a cent and the account is failed regardless of the overall result. Unlike ordinary ",[14,20,22],{"href":21},"\u002Fglossary\u002Fwhat-is-drawdown","drawdown",", it resets daily and is judged intraday.",[25,26,28],"h2",{"id":27},"how-it-works","How it works",[30,31,36],"pre",{"className":32,"code":34,"language":35},[33],"language-text","Reference    = balance or equity captured at the daily reset\nDaily loss   = Reference − Current equity\nBreach when    Daily loss ≥ Limit % × Reference\n","text",[37,38,34],"code",{"__ignoreMap":39},"",[10,41,42],{},"Three parameters decide what the rule actually means, and they differ between firms.",[10,44,45,49],{},[46,47,48],"strong",{},"Balance-based or equity-based."," A balance-based limit counts closed trades only. An equity-based limit counts floating losses too, so an unrealised loss can breach the rule before it is realised — or before it recovers. Most agreements are equity-based, so the check runs on every tick.",[10,51,52,55],{},[46,53,54],{},"Which reference."," Some firms take the balance at the reset, some the equity, some the higher of the two. That third variant is strictest: unrealised profit raises the reference, so an account opening the day on a floating winner gets no extra room, only a higher bar to fall from.",[10,57,58,61],{},[46,59,60],{},"When the day starts."," The reset happens at a fixed time on the firm's server, typically 00:00 platform time or 17:00 New York — not your local midnight. A position held across it changes which day's budget it consumes, and a loss taken at 23:55 platform time comes from a budget that refills five minutes later.",[10,63,64],{},"A worked case: a $100,000 account, 5% equity-based limit, balance reference. The floor is $95,000 equity. Closed losses of $3,000 plus a floating loss of $2,100 puts equity at $94,900 — breached, even though only $3,000 was realised, and even if that open position closes at break-even an hour later.",[10,66,67,68,72],{},"It runs in parallel with ",[14,69,71],{"href":70},"\u002Fglossary\u002Fwhat-is-maximum-drawdown","the overall limit",", measured against the initial balance or a trailing high-water mark, which never resets. The daily one is tighter and breached far more often.",[25,74,76],{"id":75},"why-it-matters","Why it matters",[10,78,79],{},"The daily limit changes what a strategy is allowed to be, not just how large it may trade. Any system that recovers within the same day — averaging down, grid, holding through an adverse move — is incompatible with an equity-based daily rule, however well it performs over a month.",[10,81,82,83,87],{},"It also blocks the worst reflex in trading: doubling size to recover a loss on the day it happened. Whether a firm imposes the rule or a trader adopts it, that is most of its value — a second floor alongside ",[14,84,86],{"href":85},"\u002Fglossary\u002Fwhat-is-margin-level","margin level",", and on a leveraged account usually the one reached first.",[25,89,91],{"id":90},"what-the-data-shows","What the data shows",[10,93,94,95,102,103,106],{},"Across the public accounts on ShowMyTrades with trading history (August 2026), the ",[46,96,97,101],{},[14,98,100],{"href":99},"\u002Fglossary\u002Fwhat-is-average-trade-length","median trade length"," is 2.4 hours"," and the median account has ",[46,104,105],{},"171 closed trades",". These are accounts published here, not traders in general.",[10,108,109],{},"A 2.4-hour median means the typical position opens and closes inside one session. For accounts trading that way the daily limit, not the overall one, is the binding constraint: nearly all the risk is expressed and resolved inside a single reset window.",[10,111,112,113,116,117,120,121,124],{},"The depth figures set the scale: median deepest drawdown ",[46,114,115],{},"9.7%",", with ",[46,118,119],{},"38.5% under 5%"," and ",[46,122,123],{},"38.2% past 20%",". A 5% daily rule is calibrated to be uncomfortable, not generous.",[10,126,127,128,120,131,134,135,139],{},"Automation matters too: median autotrading share is ",[46,129,130],{},"99%",[46,132,133],{},"53.9% of accounts run above 90% automated",". An ",[14,136,138],{"href":137},"\u002Fglossary\u002Fwhat-is-an-expert-advisor","Expert Advisor"," has no concept of the firm's reset time unless it was coded with one, which is why the reference-and-reset detail is not trivia.",[25,141,143],{"id":142},"where-you-see-it-on-showmytrades","Where you see it on ShowMyTrades",[10,145,146],{},"ShowMyTrades does not set or enforce prop firm rules. It provides the day-level record needed to check whether one was respected.",[148,149,150,162,172,178],"ul",{},[151,152,153,154,157,158,161],"li",{},"The ",[46,155,156],{},"Monthly Returns"," module has a ",[46,159,160],{},"Calendar"," view alongside Table, Chart and Summary. It shows every day's result with week summaries beside it, so a single bad day stays visible instead of averaging into its month.",[151,163,164,167,168,171],{},[46,165,166],{},"Avg Daily %",", the third row of the ",[46,169,170],{},"Account Stats"," panel, under Gain and Abs. Gain, gives the typical day an outlier is judged against.",[151,173,153,174,177],{},[46,175,176],{},"Drawdown"," view in the charts viewer plots daily drawdown as bars over the account's life; days that approached a limit read as spikes.",[151,179,153,180,183],{},[46,181,182],{},"trades table",", with Duration, Profit (Gross), Swap and Commission per trade, is how a single day's loss is reconstructed.",[10,185,186],{},"Note the measurement gap: the calendar is built from closed results, while an equity-based rule watches floating equity tick by tick. A day that reads as a small loss here may still have breached one intraday.",[25,188,190],{"id":189},"common-misunderstandings","Common misunderstandings",[148,192,193,199,205,211],{},[151,194,195,198],{},[46,196,197],{},"\"I closed only 4% down, so a 5% rule held.\""," Under an equity-based limit, floating losses count the moment they exist. What you closed is not what was measured.",[151,200,201,204],{},[46,202,203],{},"\"The day resets at midnight.\""," It resets at the firm's server time. Traders in other time zones routinely book a loss on what they believe is the next day.",[151,206,207,210],{},[46,208,209],{},"\"The overall limit is the real risk.\""," The daily one is smaller and tested every session. It ends most accounts.",[151,212,213,216,217,221],{},[46,214,215],{},"\"Hedging pauses the loss.\""," Both legs still float, both carry ",[14,218,220],{"href":219},"\u002Fglossary\u002Fwhat-is-a-spread","spread"," and swap, and combined equity is what the rule reads.",[10,223,224,225,229],{},"For how to read a single day in context of the month around it, see ",[14,226,228],{"href":227},"\u002Fguides\u002Fmonthly-returns-table-explained","the monthly returns table explained",".",{"title":39,"searchDepth":231,"depth":231,"links":232},2,[233,234,235,236,237],{"id":27,"depth":231,"text":28},{"id":75,"depth":231,"text":76},{"id":90,"depth":231,"text":91},{"id":142,"depth":231,"text":143},{"id":189,"depth":231,"text":190},"Risk","2026-08-19T00:00:00.000Z","A daily drawdown limit caps how much an account may lose in one trading day, measured from a daily reference. Balance versus equity, reset times, and real data.",true,"md",{},"\u002Fglossary\u002Fwhat-is-a-daily-drawdown-limit",[246,247,248,249],"what-is-drawdown","what-is-maximum-drawdown","what-is-margin-level","what-is-risk-of-ruin",{"title":5,"description":240},"5.glossary\u002Fwhat-is-a-daily-drawdown-limit","Daily Drawdown Limit","pnA2cFIVCRvmJ1MVWvwNkuYA7LHY-cxSCLWEoBgyzz8",[255,466,744,1050],{"id":256,"title":257,"body":258,"category":455,"date":239,"description":456,"draft":457,"extension":242,"meta":458,"navigation":241,"path":21,"related":459,"seo":463,"stem":464,"term":176,"updated":239,"__hash__":465},"glossary\u002F5.glossary\u002Fwhat-is-drawdown.md","What Is Drawdown? Definition, Formula and Real Numbers",{"type":7,"value":259,"toc":448},[260,263,265,268,274,277,280,314,316,319,326,331,334,346,348,353,369,372,374,394,409,411,441],[10,261,262],{},"Drawdown is the decline in an account's value from a previous peak down to a subsequent low, expressed as a percentage of that peak. It measures how far the account fell from its own best point, not how much it lost on any single trade. Because it accumulates, a 20% drawdown can be built out of forty small losses just as easily as out of one disaster.",[25,264,28],{"id":27},[10,266,267],{},"Every account carries a running high-water mark: the highest value it has ever reached. Drawdown is the distance below that mark at any given moment.",[30,269,272],{"className":270,"code":271,"language":35},[33],"Drawdown % = (Peak value − Current value) \u002F Peak value × 100\n",[37,273,271],{"__ignoreMap":39},[10,275,276],{},"The mark only moves up. When a new high is printed, the high-water mark resets to it and drawdown returns to zero. Until then, every day below the peak is a day in drawdown, whether the account is falling or grinding sideways.",[10,278,279],{},"Three distinctions decide what the number actually means:",[148,281,282,293,299],{},[151,283,284,287,288,292],{},[46,285,286],{},"Relative vs absolute."," Relative drawdown is the percentage above. Absolute drawdown, as MetaTrader reports it, is the fall below the ",[289,290,291],"em",{},"initial deposit"," in currency — a completely different figure that can read 0% on an account currently 40% below its peak.",[151,294,295,298],{},[46,296,297],{},"Equity vs balance."," Equity drawdown counts floating losses on open positions. Balance drawdown counts only closed trades, so a loss that is never realised never appears in it.",[151,300,301,304,305,308,309,313],{},[46,302,303],{},"Current vs maximum."," Current drawdown is where the account sits today. The historical worst is ",[14,306,307],{"href":70},"maximum drawdown",", and it is the figure most ",[14,310,312],{"href":311},"\u002Fglossary\u002Fwhat-is-a-track-record","track records"," quote.",[25,315,76],{"id":75},[10,317,318],{},"Drawdown is the constraint that decides whether a strategy is investable, because losses and gains do not compound symmetrically. A 20% fall needs a 25% gain to get back to even. A 50% fall needs 100%.",[10,320,321],{},[322,323],"img",{"alt":324,"src":325},"A 10% loss needs an 11.1% gain to undo it, 25% needs 33.3%, 50% needs 100%, 70% needs 233%","\u002Fimages\u002Farticles\u002Frecovery-asymmetry.svg",[10,327,328],{},[289,329,330],{},"Past 50%, the recovery is a bigger job than the loss that caused it.",[10,332,333],{},"It is also the number that removes people from the market. Almost nobody quits during a fast, violent fall — the emotion there is hope. They quit in month nine of a flat recovery. Depth is only half of it; duration is the other half, and it is invisible on a returns chart.",[10,335,336,337,120,341,345],{},"And drawdown is the direct output of ",[14,338,340],{"href":339},"\u002Fglossary\u002Fwhat-is-position-sizing","position sizing",[14,342,344],{"href":343},"\u002Fglossary\u002Fwhat-is-a-stop-loss","stop-loss"," discipline, far more than of entry quality. Two traders with identical signals and different lot sizes produce identical win rates and completely different survivability.",[25,347,91],{"id":90},[10,349,350,351,229],{},"The figures below describe accounts published on ShowMyTrades. They are not a survey of traders in general. Across the published accounts that have trading history (August 2026), drawn from 15,436,464 synchronised trades, the median deepest drawdown ever reached is ",[46,352,115],{},[10,354,355,356,360,361,364,365,368],{},"Set that against what the same accounts earned. The median ",[14,357,359],{"href":358},"\u002Fglossary\u002Fwhat-is-time-weighted-return","time-weighted return"," is ",[46,362,363],{},"+3.2%",", and ",[46,366,367],{},"63.0%"," of them are positive over time. The middle account here therefore gave up roughly three times its eventual return in peak-to-trough decline along the way: the risk absorbed is larger than the result, and larger by a multiple rather than a margin.",[10,370,371],{},"That ratio, not the raw depth, is what makes a drawdown figure readable. A published claim of large gains beside a two- or three-percent drawdown is not impossible, but it sits at the outer edge of this distribution, and the rest of the account page is where an edge case has to be justified.",[25,373,143],{"id":142},[10,375,376,377,379,380,383,384,386,387,393],{},"On every published account page, the ",[46,378,170],{}," panel carries two figures on consecutive rows, immediately below ",[46,381,382],{},"Avg Monthly %",": ",[46,385,176],{},", measured on equity so floating losses on open positions are included, and ",[46,388,389],{},[14,390,392],{"href":391},"\u002Fglossary\u002Fwhat-is-drawdown-on-balance","DD on Balance",", measured on closed results only. Both are historical maxima rather than today's reading, and both come from the broker feed rather than from the account owner.",[10,395,396,397,399,400,403,404,408],{},"The charts module has a ",[46,398,176],{}," view that plots daily drawdown as bars over the life of the account. That is where the ",[289,401,402],{},"duration"," of a decline becomes readable instead of inferred, which no single headline percentage can convey. The ",[14,405,407],{"href":406},"\u002Ftools\u002Fdrawdown-calculator","drawdown calculator"," runs the recovery arithmetic on your own balance.",[25,410,190],{"id":189},[148,412,413,419,425,435],{},[151,414,415,418],{},[46,416,417],{},"\"Drawdown is my biggest losing trade.\""," It is not. It is a cumulative peak-to-trough path that can contain hundreds of trades, including winners.",[151,420,421,424],{},[46,422,423],{},"\"My drawdown went back to zero after I recovered.\""," Current drawdown did. Maximum drawdown never falls, by design — it stops a good quarter from erasing a bad one.",[151,426,427,430,431,229],{},[46,428,429],{},"\"Low drawdown means low risk.\""," On a young account it usually means untested. The median published account here has 171 closed trades; below a few hundred, ",[14,432,434],{"href":433},"\u002Fguides\u002Fhow-much-history-a-track-record-needs","a small drawdown is a sample size, not a risk profile",[151,436,437,440],{},[46,438,439],{},"\"Balance drawdown is the real one.\""," It is the flattering one. Grid and averaging-down systems keep balance drawdown small precisely by refusing to close losers.",[10,442,443,444,229],{},"For how drawdown reads alongside every other number on an account page, see ",[14,445,447],{"href":446},"\u002Fguides\u002Freading-a-trading-account-dashboard","how to read a trading account dashboard",{"title":39,"searchDepth":231,"depth":231,"links":449},[450,451,452,453,454],{"id":27,"depth":231,"text":28},{"id":75,"depth":231,"text":76},{"id":90,"depth":231,"text":91},{"id":142,"depth":231,"text":143},{"id":189,"depth":231,"text":190},"Metrics","Drawdown is the peak-to-trough fall in an account's value, in percent. Here is the formula, why it is cumulative, and what thousands of real trading accounts show.",false,{},[247,460,461,462],"what-is-position-sizing","what-is-a-stop-loss","what-is-a-profit-factor",{"title":257,"description":456},"5.glossary\u002Fwhat-is-drawdown","DMQq_wxULyvtTewFH3EendlyxckASOfp4LLweDXbTKY",{"id":467,"title":468,"body":469,"category":238,"date":239,"description":734,"draft":241,"extension":242,"meta":735,"navigation":241,"path":85,"related":736,"seo":740,"stem":741,"term":742,"updated":239,"__hash__":743},"glossary\u002F5.glossary\u002Fwhat-is-margin-level.md","What Is Margin Level? Formula and Stop Out Levels",{"type":7,"value":470,"toc":727},[471,474,476,482,485,493,575,578,584,613,615,623,625,636,639,650,652,655,694,696,722],[10,472,473],{},"Margin level is account equity divided by the margin locked up by open positions, expressed as a percentage. It is the number a broker watches to decide whether your positions are still adequately funded; below published thresholds the platform warns you, then closes positions for you.",[25,475,28],{"id":27},[30,477,480],{"className":478,"code":479,"language":35},[33],"Equity       = Balance + floating P&L of open positions\nUsed margin  = Σ (position size × contract size × price) ÷ leverage\nMargin level = (Equity ÷ Used margin) × 100\nFree margin  = Equity − Used margin\n",[37,481,479],{"__ignoreMap":39},[10,483,484],{},"500% means equity is five times the collateral in use; 100% means it exactly equals it. Below that the account is funding positions it can no longer cover.",[10,486,487,488,492],{},"Worked example: a $10,000 account opens 5 lots of EUR\u002FUSD at 1:100 ",[14,489,491],{"href":490},"\u002Fglossary\u002Fwhat-is-leverage","leverage",". Used margin is about $5,400, margin level starts at 185%, and one pip on that size is $50.",[494,495,496,515],"table",{},[497,498,499],"thead",{},[500,501,502,506,509,512],"tr",{},[503,504,505],"th",{},"Adverse move",[503,507,508],{},"Equity",[503,510,511],{},"Margin level",[503,513,514],{},"Free margin",[516,517,518,533,547,561],"tbody",{},[500,519,520,524,527,530],{},[521,522,523],"td",{},"0 pips",[521,525,526],{},"$10,000",[521,528,529],{},"185%",[521,531,532],{},"$4,600",[500,534,535,538,541,544],{},[521,536,537],{},"−60 pips",[521,539,540],{},"$7,000",[521,542,543],{},"130%",[521,545,546],{},"$1,600",[500,548,549,552,555,558],{},[521,550,551],{},"−120 pips",[521,553,554],{},"$4,000",[521,556,557],{},"74%",[521,559,560],{},"−$1,400",[500,562,563,566,569,572],{},[521,564,565],{},"−146 pips",[521,567,568],{},"$2,700",[521,570,571],{},"50%",[521,573,574],{},"−$2,700",[10,576,577],{},"A 146-pip move, routine on EUR\u002FUSD in a news week, takes that account from apparently comfortable to liquidated at the broker's thresholds — typically 100% and 50%, but always set in the contract rather than by any universal standard.",[10,579,580,583],{},[46,581,582],{},"Why it collapses fastest when you are already losing."," With size held constant the ratio falls in a straight line, but four things break that assumption at exactly the wrong moment:",[148,585,586,592,598,604],{},[151,587,588,591],{},[46,589,590],{},"The denominator does not shrink with you."," Used margin is frozen at the size you opened, so every dollar of floating loss comes off the numerator alone.",[151,593,594,597],{},[46,595,596],{},"Losing traders add size."," Averaging down, grid and martingale systems open more positions as price moves against them: equity falls while used margin rises, so the ratio drops non-linearly.",[151,599,600,603],{},[46,601,602],{},"Margin requirements rise in volatility."," Brokers cut leverage before major releases and weekends. Used margin increases on positions you never touched, with no price move at all.",[151,605,606,609,610,612],{},[46,607,608],{},"Spreads widen with the loss."," Equity is marked at the price that would close the position, so a ",[14,611,220],{"href":219}," blowout reprices the whole book at once.",[25,614,76],{"id":75},[10,616,617,618,622],{},"Margin level converts an unrealised loss into a forced, realised one at the worst point of the move — the mechanism behind a ",[14,619,621],{"href":620},"\u002Fglossary\u002Fwhat-is-a-margin-call","margin call",". It also reframes sizing: opening a position is choosing how much price movement the account can absorb before someone else takes over the exits, and that buffer, in pips, is knowable before you click.",[25,624,91],{"id":90},[10,626,94,627,360,630,632,633,106],{},[14,628,629],{"href":70},"median deepest drawdown",[46,631,115],{},", but ",[46,634,635],{},"17.6% have passed 50%",[10,637,638],{},"Hold that 50% against the ratio. Margin level scales with equity: an account at a comfortable-looking 200% is already at 100% — the usual call threshold — once equity has halved, and reaching a 50% stop out takes a fall of roughly three quarters. Falls past half are about one published account in six.",[10,640,641,642,644,645,649],{},"The gap between the two published drawdown figures tells the rest. ",[46,643,176],{}," is measured on equity and includes floating losses; ",[46,646,647],{},[14,648,392],{"href":391}," counts closed results only. A first figure far larger than the second means the account carried deep unrealised losses — another way of saying its margin level was low.",[25,651,143],{"id":142},[10,653,654],{},"Used margin is not published, so no account page carries a margin-level gauge. The numerator and the two variables behind the denominator are all visible.",[148,656,657,671,676,688],{},[151,658,659,120,662,664,665,667,668,670],{},[46,660,661],{},"Balance",[46,663,508],{},", the two rows immediately below ",[46,666,392],{}," in the ",[46,669,170],{}," panel, where Equity carries its own percentage in brackets — equity as a share of balance. Well under 100% is an account holding floating losses right now, its margin level falling with them.",[151,672,153,673,675],{},[46,674,491],{}," badge in the account header, beside the broker and the account currency: it divides the notional value of every position, fixing the denominator before the first order.",[151,677,153,678,684,685,687],{},[46,679,680],{},[14,681,683],{"href":682},"\u002Fguides\u002Ftrading-volume-analysis","Volume"," column in the ",[46,686,182],{},", in lots, which is the other half of used margin. Several tickets open at once on large volume means a large denominator against the same equity.",[151,689,690,693],{},[46,691,692],{},"Highest $",", the peak balance on the row directly under Equity, showing how far equity now sits below the account's own best.",[25,695,190],{"id":189},[148,697,698,704,710,716],{},[151,699,700,703],{},[46,701,702],{},"\"Margin level is my leverage.\""," Related but not the same. Leverage is set per instrument and determines used margin; margin level is a live ratio that changes on every tick.",[151,705,706,709],{},[46,707,708],{},"\"1,000% is safe.\""," It is safe for that position set. Open four more of the same size and the same equity covers five times the collateral.",[151,711,712,715],{},[46,713,714],{},"\"Free margin is money I can withdraw.\""," It is unencumbered equity, including floating profit that has not been realised and can disappear.",[151,717,718,721],{},[46,719,720],{},"\"Closing one position fixes it.\""," Not proportionally. Closing the largest releases the most margin and lifts the ratio fastest; closing the smallest may not lift it above the threshold at all. Which one the platform picks at a stop out is not your choice.",[10,723,724,725,229],{},"For how equity, balance and drawdown read together, see ",[14,726,447],{"href":446},{"title":39,"searchDepth":231,"depth":231,"links":728},[729,730,731,732,733],{"id":27,"depth":231,"text":28},{"id":75,"depth":231,"text":76},{"id":90,"depth":231,"text":91},{"id":142,"depth":231,"text":143},{"id":189,"depth":231,"text":190},"Margin level is equity divided by used margin, as a percentage. The formula, the margin call and stop out thresholds, and why it falls fastest when you lose.",{},[737,738,460,739],"what-is-a-margin-call","what-is-leverage","what-is-a-daily-drawdown-limit",{"title":468,"description":734},"5.glossary\u002Fwhat-is-margin-level","Margin Level","Q9Dx6hpaBEKrz852D0ibuqsOObwtB7xfIPla6pe6iSc",{"id":745,"title":746,"body":747,"category":455,"date":239,"description":1042,"draft":457,"extension":242,"meta":1043,"navigation":241,"path":70,"related":1044,"seo":1046,"stem":1047,"term":1048,"updated":239,"__hash__":1049},"glossary\u002F5.glossary\u002Fwhat-is-maximum-drawdown.md","What Is Maximum Drawdown? Formula and Recovery Maths",{"type":7,"value":748,"toc":1035},[749,756,758,761,767,770,820,826,843,845,848,909,912,919,921,927,933,938,949,974,976,989,1002,1004,1030],[10,750,751,752,755],{},"Maximum drawdown is the largest ",[14,753,754],{"href":21},"peak-to-trough decline"," an account has recorded over its entire history, expressed as a percentage of the peak. It is the worst loss the strategy has actually inflicted, as opposed to the worst loss its owner expects. It never decreases: once printed, a 34% maximum drawdown stays at 34% through every subsequent new high.",[25,757,28],{"id":27},[10,759,760],{},"Walk the equity curve forward one point at a time, keeping the highest value seen so far. At each point, measure the fall below that running high. The maximum drawdown is the deepest fall found anywhere on the walk.",[30,762,765],{"className":763,"code":764,"language":35},[33],"MaxDD % = max over t of [ (Peak(0..t) − Value(t)) \u002F Peak(0..t) ] × 100\n",[37,766,764],{"__ignoreMap":39},[10,768,769],{},"The result depends entirely on which curve you walk, and ShowMyTrades publishes both.",[494,771,772,788],{},[497,773,774],{},[500,775,776,779,782,785],{},[503,777,778],{},"Metric",[503,780,781],{},"Measured on",[503,783,784],{},"Open positions counted?",[503,786,787],{},"What it tells you",[516,789,790,805],{},[500,791,792,796,799,802],{},[521,793,794],{},[46,795,176],{},[521,797,798],{},"Equity (balance + floating P&L)",[521,800,801],{},"Yes",[521,803,804],{},"The real fall in what the account was worth at that moment",[500,806,807,811,814,817],{},[521,808,809],{},[46,810,392],{},[521,812,813],{},"Closed balance only",[521,815,816],{},"No",[521,818,819],{},"The fall in realised results",[10,821,822,825],{},[14,823,824],{"href":391},"Balance drawdown"," is the more flattering figure, and it is flattering by construction: an unrealised loss is invisible to it. That is the mechanism behind grid, martingale and averaging-down systems — they keep the balance curve smooth by never closing losers.",[10,827,828,829,120,832,835,836,839,840,842],{},"So an account showing ",[46,830,831],{},"Drawdown 41%",[46,833,834],{},"DD on Balance 6%"," is not broken. It was 41% underwater while its closed results claimed a rough patch of 6%. The equity figure is the honest one, and the ",[289,837,838],{},"gap between the two"," is a description of the strategy. When the two sit close together, positions are being closed near the point where damage is taken — which is what a ",[14,841,344],{"href":343}," is for.",[25,844,76],{"id":75},[10,846,847],{},"Recovery is asymmetric, because the gain has to compound off a smaller base than the loss did.",[494,849,850,860],{},[497,851,852],{},[500,853,854,857],{},[503,855,856],{},"Maximum drawdown",[503,858,859],{},"Gain needed to reach the old peak",[516,861,862,870,878,886,893,901],{},[500,863,864,867],{},[521,865,866],{},"10%",[521,868,869],{},"11.1%",[500,871,872,875],{},[521,873,874],{},"20%",[521,876,877],{},"25.0%",[500,879,880,883],{},[521,881,882],{},"30%",[521,884,885],{},"42.9%",[500,887,888,890],{},[521,889,571],{},[521,891,892],{},"100.0%",[500,894,895,898],{},[521,896,897],{},"70%",[521,899,900],{},"233.3%",[500,902,903,906],{},[521,904,905],{},"90%",[521,907,908],{},"900.0%",[10,910,911],{},"Under 20% the asymmetry is a nuisance. Past 50% it becomes the dominant fact of the account: you have to double your money with the same strategy that just halved it.",[10,913,914,915,918],{},"Maximum drawdown is also the number that sets your practical leverage ceiling. If a system has historically drawn down 30%, running it at double ",[14,916,917],{"href":339},"position size"," implies a 60% drawdown you have no evidence you can sit through.",[25,920,91],{"id":90},[10,922,923,924,926],{},"The numbers here come from accounts published on ShowMyTrades, not from traders at large. Across the published accounts that have trading history (August 2026), the median deepest drawdown is ",[46,925,115],{},", and the spread around that median is wide in both directions.",[10,928,929],{},[322,930],{"alt":931,"src":932},"Deepest drawdown across public ShowMyTrades accounts: 38.5% under 5%, 23.3% between 5% and 20%, 20.6% between 20% and 50%, 17.6% over 50%","\u002Fimages\u002Farticles\u002Fdrawdown-distribution.svg",[10,934,935],{},[289,936,937],{},"Median 9.7%, and the tail is longer than most published claims allow for.",[10,939,940,941,944,945,948],{},"At the far end, ",[46,942,943],{},"17.6% have fallen more than 50%"," below their peak and ",[46,946,947],{},"38.2% have been more than 20% underwater",". Roughly one account in six has therefore faced the 50% row of the recovery table above: a 100% gain required just to get back to level.",[10,950,951,952,955,956,958,959,961,962,965,966,969,970,229],{},"The near end deserves the same scepticism: ",[46,953,954],{},"38.5%"," record a maximum drawdown under 5%. Some of those are genuinely conservative. Many are simply young. The median published account holds ",[46,957,105],{}," at a ",[14,960,100],{"href":99}," of ",[46,963,964],{},"2.4 hours","; on a sample that size, a small maximum drawdown records what has not happened yet rather than what cannot. A maximum drawdown is a claim about the tail of a distribution, and ",[14,967,968],{"href":433},"tails need history behind them"," — which is why the figure is only worth much on a ",[14,971,973],{"href":972},"\u002Fglossary\u002Fwhat-is-a-verified-track-record","verified track record",[25,975,143],{"id":142},[10,977,153,978,980,981,120,983,985,986,988],{},[46,979,170],{}," panel on every published account page shows ",[46,982,176],{},[46,984,392],{}," on consecutive rows below ",[46,987,382],{},", both derived from the broker feed rather than self-reported. Compare them first; the divergence is the fastest read on the page.",[10,990,991,992,994,995,998,999,1001],{},"The charts module includes a dedicated ",[46,993,176],{}," view, which plots daily drawdown as bars and so answers the question the headline percentage cannot: how ",[289,996,997],{},"long"," the account stayed below its high-water mark. A 25% drawdown recovered in seven weeks and a 25% drawdown still open fourteen months later print the identical number and are not the same account. The ",[14,1000,407],{"href":406}," runs the recovery table above against your own balance.",[25,1003,190],{"id":189},[148,1005,1006,1012,1018,1024],{},[151,1007,1008,1011],{},[46,1009,1010],{},"\"My maximum drawdown improved this year.\""," It cannot improve. It is a historical maximum, and a good year cannot un-print it.",[151,1013,1014,1017],{},[46,1015,1016],{},"\"The two drawdown figures should match.\""," They match only when positions are closed near the loss. A wide gap is the signature of held losers, not a data error.",[151,1019,1020,1023],{},[46,1021,1022],{},"\"Small max drawdown, low risk.\""," Not on a short history. Ask how many trades and how many months produced it before treating it as a risk measure.",[151,1025,1026,1029],{},[46,1027,1028],{},"\"Percentage drawdown and money drawdown are interchangeable.\""," A 30% fall on a $2,000 account and on a $200,000 account are the same risk profile and very different experiences — but only the percentage is comparable between accounts.",[10,1031,1032,1033,229],{},"For maximum drawdown in context with every other metric on a live account page, read ",[14,1034,447],{"href":446},{"title":39,"searchDepth":231,"depth":231,"links":1036},[1037,1038,1039,1040,1041],{"id":27,"depth":231,"text":28},{"id":75,"depth":231,"text":76},{"id":90,"depth":231,"text":91},{"id":142,"depth":231,"text":143},{"id":189,"depth":231,"text":190},"Maximum drawdown is the deepest peak-to-trough fall an account ever recorded. The formula, the recovery table, and the real spread across thousands of accounts.",{},[246,460,1045,462],"what-is-a-verified-track-record",{"title":746,"description":1042},"5.glossary\u002Fwhat-is-maximum-drawdown","Maximum Drawdown","ApNMddCmg0QCLnuOwuyL_buXf8nvEi3z-WICzHc5jDU",{"id":1051,"title":1052,"body":1053,"category":238,"date":239,"description":1339,"draft":241,"extension":242,"meta":1340,"navigation":241,"path":1341,"related":1342,"seo":1344,"stem":1345,"term":1346,"updated":239,"__hash__":1347},"glossary\u002F5.glossary\u002Fwhat-is-risk-of-ruin.md","What Is Risk of Ruin? Formula and Sizing Table",{"type":7,"value":1054,"toc":1332},[1055,1058,1060,1063,1069,1076,1147,1150,1158,1160,1168,1171,1177,1179,1189,1199,1214,1216,1219,1289,1291,1325],[10,1056,1057],{},"Risk of ruin is the probability that an account loses a defined share of its capital before its edge has time to pay out. It is a survival probability rather than a forecast of returns, computed from win rate, payoff ratio and risk per trade. A system with a genuine positive edge can still have a high risk of ruin, and the variable that decides is almost always position size.",[25,1059,28],{"id":27},[10,1061,1062],{},"The classic closed form assumes a fixed fractional bet with a 1:1 payoff and defines ruin as reaching zero.",[30,1064,1067],{"className":1065,"code":1066,"language":35},[33],"RoR = (q \u002F p) ^ N\n\np = probability of winning a trade\nq = 1 − p\nN = capital ÷ risk per trade   (units of risk available)\n",[37,1068,1066],{"__ignoreMap":39},[10,1070,1071,1072,1075],{},"The exponent is what matters: halving risk per trade doubles ",[37,1073,1074],{},"N",", and doubling an exponent squares the probability. Take a system winning 52% of trades at 1:1, where the only thing changing down the table is lot size.",[494,1077,1078,1091],{},[497,1079,1080],{},[500,1081,1082,1085,1088],{},[503,1083,1084],{},"Risk per trade",[503,1086,1087],{},"Units of risk",[503,1089,1090],{},"Risk of ruin",[516,1092,1093,1104,1115,1126,1137],{},[500,1094,1095,1098,1101],{},[521,1096,1097],{},"1%",[521,1099,1100],{},"100",[521,1102,1103],{},"0.03%",[500,1105,1106,1109,1112],{},[521,1107,1108],{},"2%",[521,1110,1111],{},"50",[521,1113,1114],{},"1.8%",[500,1116,1117,1120,1123],{},[521,1118,1119],{},"4%",[521,1121,1122],{},"25",[521,1124,1125],{},"13.5%",[500,1127,1128,1131,1134],{},[521,1129,1130],{},"5%",[521,1132,1133],{},"20",[521,1135,1136],{},"20.2%",[500,1138,1139,1141,1144],{},[521,1140,866],{},[521,1142,1143],{},"10",[521,1145,1146],{},"44.9%",[10,1148,1149],{},"Going from 1% to 2% multiplies the probability of ruin by more than fifty. Going from 1% to 10% turns a rounding error into a coin flip. The edge never changed.",[10,1151,1152,1153,1157],{},"Real systems do not pay 1:1 and their trades are not independent, so the closed form is a teaching device rather than an answer. Practical estimates simulate thousands of trade sequences and count the paths that reach the loss level. That is how the ",[14,1154,1156],{"href":1155},"\u002Ftools\u002Frisk-of-ruin-calculator","risk of ruin calculator"," works; it also reports risk of drawdown, the probability of reaching a given decline without going to zero, which is the number most traders actually need.",[25,1159,76],{"id":75},[10,1161,1162,1163,1167],{},"Risk of ruin is the bridge between ",[14,1164,1166],{"href":1165},"\u002Fglossary\u002Fwhat-is-expectancy","expectancy"," and survival: expectancy says what the average trade is worth, risk of ruin says whether you will still be trading when the average arrives.",[10,1169,1170],{},"It is also why two traders running the same signals reach opposite outcomes. Identical entries and exits, different lot sizes: same win rate, same profit factor, one account compounding and one closed. Nothing in the strategy explains the difference.",[10,1172,1173,1174,1176],{},"The practical use is inversion — fix the probability you are willing to accept and solve backwards for the ",[14,1175,917],{"href":339}," that delivers it.",[25,1178,91],{"id":90},[10,1180,1181,1182,364,1185,1188],{},"Across the public accounts on ShowMyTrades with trading history (August 2026), ",[46,1183,1184],{},"17.6% have recorded a deepest drawdown of more than 50%",[46,1186,1187],{},"38.2% have passed 20%",". These describe accounts published here, not traders in general.",[10,1190,1191,1192,1194,1195,229],{},"That 17.6% is the empirical counterpart to the table above: losing more than half an account is roughly one in six, not a rare tail. The median deepest drawdown is ",[46,1193,115],{},", so the population splits between accounts that stayed recoverable and a large minority at a level ",[14,1196,1198],{"href":1197},"\u002Fguides\u002Fmaximum-drawdown-explained","needing a 100% gain to undo",[10,1200,1201,1202,360,1206,1209,1210,1213],{},"The inputs point the same way. Median ",[14,1203,1205],{"href":1204},"\u002Fglossary\u002Fwhat-is-a-profit-factor","profit factor",[46,1207,1208],{},"1.28"," and median win rate is ",[46,1211,1212],{},"68.8%",", which together imply an average payoff ratio near 0.6: losses larger than wins, an account carried by frequency. That shape has a modest expectancy and a fat left tail, and both feed the exponent in the formula.",[25,1215,143],{"id":142},[10,1217,1218],{},"There is no live ruin probability on an account page, but every input to one is published.",[148,1220,1221,1242,1252,1270,1284],{},[151,1222,1223,1226,1227,1226,1230,120,1233,667,1236,1239,1240,229],{},[46,1224,1225],{},"Win Rate",", ",[46,1228,1229],{},"Profit Factor",[46,1231,1232],{},"Avg. Win",[46,1234,1235],{},"Avg. Loss",[46,1237,1238],{},"Advanced Statistics"," module. Avg. Win divided by Avg. Loss is the payoff ratio the formula needs; Win Rate is ",[37,1241,10],{},[151,1243,1244,1247,1248,1251],{},[46,1245,1246],{},"Expectancy",", in pips and in currency, is the edge a simulation samples from, and ",[46,1249,1250],{},"Z-Score (Probability)"," beside it says whether wins and losses arrived in streaks — the clustering the independence assumption ignores.",[151,1253,1254,120,1257,1262,1263,1266,1267,1269],{},[46,1255,1256],{},"Total Trades",[46,1258,1259],{},[14,1260,1261],{"href":99},"Avg. Trade Length",", in the same module: the median published account holds ",[46,1264,1265],{},"171"," closed trades at a median length of ",[46,1268,964],{}," — enough for a win rate, thin for a tail estimate.",[151,1271,1272,120,1274,1276,1277,120,1279,667,1281,1283],{},[46,1273,176],{},[46,1275,392],{},", the two rows between ",[46,1278,382],{},[46,1280,661],{},[46,1282,170],{}," panel: the realised outcome the probability was describing.",[151,1285,153,1286,1288],{},[46,1287,176],{}," view in the charts viewer, where every approach toward a loss level appears as bars over time rather than as one headline number.",[25,1290,190],{"id":189},[148,1292,1293,1299,1305,1315],{},[151,1294,1295,1298],{},[46,1296,1297],{},"\"A positive expectancy means I cannot go broke.\""," Only if you bet infinitesimally small amounts an infinite number of times. At 10% per trade, a positive edge and a 45% chance of ruin coexist comfortably.",[151,1300,1301,1304],{},[46,1302,1303],{},"\"A high win rate protects me.\""," Win rate is one of two inputs. At 68.8% wins with a payoff ratio near 0.6, the arithmetic sits far closer to break-even than the headline suggests.",[151,1306,1307,1310,1311,1314],{},[46,1308,1309],{},"\"Ruin means a zero balance.\""," It means whatever level ends the account: a prop firm's ",[14,1312,1313],{"href":244},"daily drawdown limit",", an investor's redemption, or the point where you stop trusting the system.",[151,1316,1317,1320,1321,1324],{},[46,1318,1319],{},"\"Risk of ruin is a fixed property of my strategy.\""," It is a property of the strategy ",[289,1322,1323],{},"and"," the sizing. The first is slow to change; the second changes before the next order.",[10,1326,1327,1328,229],{},"For why a high hit rate says less about survival than it appears to, read ",[14,1329,1331],{"href":1330},"\u002Fguides\u002Fwin-rate-is-not-an-edge","win rate is not an edge",{"title":39,"searchDepth":231,"depth":231,"links":1333},[1334,1335,1336,1337,1338],{"id":27,"depth":231,"text":28},{"id":75,"depth":231,"text":76},{"id":90,"depth":231,"text":91},{"id":142,"depth":231,"text":143},{"id":189,"depth":231,"text":190},"Risk of ruin is the probability of losing a set share of your capital before your edge arrives. The formula, the sizing table, and what thousands of accounts show.",{},"\u002Fglossary\u002Fwhat-is-risk-of-ruin",[460,247,1343,739],"what-is-expectancy",{"title":1052,"description":1339},"5.glossary\u002Fwhat-is-risk-of-ruin","Risk of Ruin","mEpVDBHuPEuSk64LoiORWfVJUCDi2UMFh4921fCe1QM",1787415694136]