[{"data":1,"prerenderedAt":1279},["ShallowReactive",2],{"\u002Fglossary\u002Fwhat-is-a-profit-factor":3,"\u002Fglossary\u002Fwhat-is-a-profit-factor-related":323},{"id":4,"title":5,"body":6,"category":307,"date":308,"description":309,"draft":310,"extension":311,"meta":312,"navigation":313,"path":314,"related":315,"seo":320,"stem":321,"term":195,"updated":308,"__hash__":322},"glossary\u002F5.glossary\u002Fwhat-is-a-profit-factor.md","What Is Profit Factor? Formula, Good Values, Real Data",{"type":7,"value":8,"toc":299},"minimark",[9,13,18,29,32,35,41,44,112,116,119,128,136,140,156,163,169,176,187,191,222,250,254,292],[10,11,12],"p",{},"Profit factor is gross profit divided by gross loss: the total won across all winning trades, divided by the total lost across all losing trades. A profit factor of 1.50 means the account made $1.50 for every $1.00 it gave back. Below 1.00 the account loses money by construction, regardless of how often it wins.",[14,15,17],"h2",{"id":16},"how-it-works","How it works",[19,20,25],"pre",{"className":21,"code":23,"language":24},[22],"language-text","Profit Factor = Gross Profit \u002F |Gross Loss|\n","text",[26,27,23],"code",{"__ignoreMap":28},"",[10,30,31],{},"Note what the formula ignores: how long the account traded, how much capital it used, and how deep it fell along the way.",[10,33,34],{},"It can also be written in terms of win rate and average trade size, which is where it becomes diagnostic:",[19,36,39],{"className":37,"code":38,"language":24},[22],"Profit Factor = (Win Rate × Avg Win) \u002F ((1 − Win Rate) × Avg Loss)\n",[26,40,38],{"__ignoreMap":28},[10,42,43],{},"Two very different systems can land on the same value. A 30% win rate with winners four times the size of losers gives 1.71. An 80% win rate with winners half the size of losers gives 2.00. Both work; they fail differently and feel completely different to trade.",[45,46,47,60],"table",{},[48,49,50],"thead",{},[51,52,53,57],"tr",{},[54,55,56],"th",{},"Profit factor",[54,58,59],{},"Reading",[61,62,63,72,80,88,96,104],"tbody",{},[51,64,65,69],{},[66,67,68],"td",{},"Below 1.00",[66,70,71],{},"Loses money — structurally, not marginally",[51,73,74,77],{},[66,75,76],{},"1.00 – 1.10",[66,78,79],{},"Inside the noise. One bad week erases it",[51,81,82,85],{},[66,83,84],{},"1.10 – 1.30",[66,86,87],{},"Thin but real edge, if the sample is large",[51,89,90,93],{},[66,91,92],{},"1.30 – 2.00",[66,94,95],{},"A working strategy",[51,97,98,101],{},[66,99,100],{},"2.00 – 3.00",[66,102,103],{},"Strong. Check trade count and cost accounting",[51,105,106,109],{},[66,107,108],{},"Above 3.00",[66,110,111],{},"Rare on long histories: usually a short sample, a few outsized winners, or open losers not yet realised",[14,113,115],{"id":114},"why-it-matters","Why it matters",[10,117,118],{},"Profit factor is the cleanest single answer to \"does this system make money\", and it is much harder to dress up than a win rate, because every loss enters the denominator at full size.",[10,120,121,122,127],{},"It is not, however, a risk measure. Profit factor knows nothing about sequence: an account that made its money in one month and bled for eleven shows the same value as one that ground upward every week. Read it next to ",[123,124,126],"a",{"href":125},"\u002Fglossary\u002Fwhat-is-maximum-drawdown","maximum drawdown",", or you are measuring the destination without the trip.",[10,129,130,131,135],{},"The same caution applies to a profit factor quoted from a ",[123,132,134],{"href":133},"\u002Fglossary\u002Fwhat-is-backtesting","backtest",": optimisers maximise exactly this ratio, so a high backtested value often measures the fitting process rather than the strategy.",[14,137,139],{"id":138},"what-the-data-shows","What the data shows",[10,141,142,143,147,148,155],{},"The figures below describe accounts published on ShowMyTrades, not traders in general. Across the published accounts that have trading history (August 2026), the ",[144,145,146],"strong",{},"median profit factor is 1.28"," and the ",[144,149,150,154],{},[123,151,153],{"href":152},"\u002Fguides\u002Fwin-rate-is-not-an-edge","median win rate"," is 68.8%",". Both are calculated after costs here: swap and commission are folded into each trade before it is classed as a winner or a loser, so 1.28 is net, not gross.",[10,157,158],{},[159,160],"img",{"alt":161,"src":162},"Medians across public ShowMyTrades accounts: a 68.8% win rate beside a 1.28 profit factor","\u002Fimages\u002Farticles\u002Fwin-rate-vs-payoff.svg",[10,164,165],{},[166,167,168],"em",{},"Two medians from the same set: the win rate looks strong, the edge behind it is thin.",[10,170,171,172,175],{},"That pairing is the point. Nearly seven trades in ten close green on the median account, and the whole edge still amounts to $1.28 earned for every $1.00 lost. Take an account sitting on both medians and invert the formula: its average winner is worth roughly ",[144,173,174],{},"0.58×"," its average loser. Winning often and earning well are separate achievements, and the first is far easier to manufacture — hold losers, cut winners, and the win rate climbs while the profit factor falls.",[10,177,178,179,182,183,186],{},"The median Sharpe ratio on the same set is ",[144,180,181],{},"0.05",", and the median account has ",[144,184,185],{},"171 closed trades",". At that sample size a profit factor above 3.00 is not evidence of a superior system; it is evidence that the sample is too small to have met its worst trade yet.",[14,188,190],{"id":189},"where-you-see-it-on-showmytrades","Where you see it on ShowMyTrades",[10,192,193,196,197,200,201,204,205,204,208,204,211,204,214,217,218,221],{},[144,194,195],{},"Profit Factor"," sits in the ",[144,198,199],{},"Advanced Statistics"," module on every published account page, alongside the numbers that explain it: ",[144,202,203],{},"Win Rate",", ",[144,206,207],{},"Avg. Win",[144,209,210],{},"Avg. Loss",[144,212,213],{},"Expectancy",[144,215,216],{},"Total Trades"," and ",[144,219,220],{},"Sharpe Ratio",". The six together say what the single ratio cannot.",[10,223,224,225,228,229,217,232,235,236,217,239,242,243,249],{},"Two product details matter. First, the costs already inside the ratio are itemised separately: the trades table carries ",[144,226,227],{},"Profit (Gross)"," with ",[144,230,231],{},"Swap",[144,233,234],{},"Commission"," as their own columns, and Advanced Statistics totals ",[144,237,238],{},"Total Commissions",[144,240,241],{},"Total Swap Paid",", so you can see how much the net figure absorbed. Across published accounts those totals stand at $4,782,670 in commissions and $862,547 in swap. Second, ",[123,244,246],{"href":245},"\u002Fguides\u002Fcustom-analysis-and-filter-presets",[144,247,248],{},"Custom Analysis"," recomputes the whole statistics block on a filtered subset — by date range, symbol, magic number, direction or lot size — which is how you check whether a profit factor holds up outside its best quarter or without its best symbol.",[14,251,253],{"id":252},"common-misunderstandings","Common misunderstandings",[255,256,257,269,280,286],"ul",{},[258,259,260,263,264,268],"li",{},[144,261,262],{},"\"Profit factor above 1 means I am profitable.\""," Only if costs are inside the ratio. Where they are not, a high-frequency system at 1.05 gross can be flat or negative ",[123,265,267],{"href":266},"\u002Fglossary\u002Fwhat-is-cost-percentage","once commission and swap are applied",".",[258,270,271,274,275,279],{},[144,272,273],{},"\"A high profit factor means low risk.\""," It says nothing about drawdown, position size or sequence. A martingale ",[123,276,278],{"href":277},"\u002Fglossary\u002Fwhat-is-position-sizing","position-sizing"," progression can post 4.00 right up to the day it does not.",[258,281,282,285],{},[144,283,284],{},"\"It is comparable across timeframes.\""," It is not annualised. A scalper's 1.20 over 20,000 trades and a swing trader's 1.20 over 60 are not the same statement.",[258,287,288,291],{},[144,289,290],{},"\"Open trades do not affect it.\""," They do, by absence. Floating losses left open are excluded from gross loss entirely, which inflates the ratio until the position is closed.",[10,293,294,295,268],{},"For which metrics to track over time and in what order, see ",[123,296,298],{"href":297},"\u002Fguides\u002Ftracking-trading-performance","the guide to tracking trading performance",{"title":28,"searchDepth":300,"depth":300,"links":301},2,[302,303,304,305,306],{"id":16,"depth":300,"text":17},{"id":114,"depth":300,"text":115},{"id":138,"depth":300,"text":139},{"id":189,"depth":300,"text":190},{"id":252,"depth":300,"text":253},"Metrics","2026-08-19T00:00:00.000Z","Profit factor is gross profit divided by gross loss. Below 1.0 an account loses by construction. Here are the bands and the 1.28 median across thousands of accounts.",false,"md",{},true,"\u002Fglossary\u002Fwhat-is-a-profit-factor",[316,317,318,319],"what-is-drawdown","what-is-maximum-drawdown","what-is-position-sizing","what-is-backtesting",{"title":5,"description":309},"5.glossary\u002Fwhat-is-a-profit-factor","0loLRuqRU0mx9nEOfjdEFW6U1Fb_JAC1jN2JQSkIjuE",[324,555,760,1068],{"id":325,"title":326,"body":327,"category":544,"date":308,"description":545,"draft":310,"extension":311,"meta":546,"navigation":313,"path":133,"related":547,"seo":551,"stem":552,"term":553,"updated":308,"__hash__":554},"glossary\u002F5.glossary\u002Fwhat-is-backtesting.md","What Is Backtesting? Definition, Limits and Live Data",{"type":7,"value":328,"toc":537},[329,332,334,337,343,346,376,384,386,389,392,394,405,427,438,444,449,451,459,486,497,499,530],[10,330,331],{},"Backtesting is the simulation of a trading strategy against historical price data to estimate how it would have performed. It produces an equity curve, a profit factor and a drawdown figure without a single order ever reaching a broker. Those outputs are a hypothesis about the strategy, not a record of it.",[14,333,17],{"id":16},[10,335,336],{},"The tester replays historical bars or ticks, applies the strategy's entry and exit rules to each one, and records a simulated fill. Everything that separates the simulation from reality lives in the cost and fill model:",[19,338,341],{"className":339,"code":340,"language":24},[22],"Net result per trade = Gross P&L − spread − commission − swap − slippage\n\nSpread cost  = spread (in price) × contract size × lots\nSwap         = swap rate × lots × nights held\n",[26,342,340],{"__ignoreMap":28},[10,344,345],{},"Three settings decide how honest the output is:",[255,347,348,354,365],{},[258,349,350,353],{},[144,351,352],{},"Modelling quality."," MT4 and MT5 report it as a percentage. \"Every tick\" interpolates from 1-minute bars unless you supply real tick data; \"control points\" and \"open prices only\" are approximations that flatter intrabar strategies badly.",[258,355,356,359,360,364],{},[144,357,358],{},"Spread assumption."," Most testers default to a fixed spread. Live spread widens at the rollover, on news and at the session open — exactly the moments many systems trade. A ",[123,361,363],{"href":362},"\u002Fglossary\u002Fwhat-is-a-spread","spread"," modelled at 0.8 pips and paid at 4.0 pips is a different strategy.",[258,366,367,370,371,375],{},[144,368,369],{},"Slippage and fill logic."," The tester assumes your order is filled at the requested price. ",[123,372,374],{"href":373},"\u002Fglossary\u002Fwhat-is-slippage","Slippage",", rejected orders, requotes and partial fills do not exist in it.",[10,377,378,379,383],{},"There is a fourth problem the software does not report: the parameter set itself survived a search. If you ran 400 variants and kept the best one, the result you are reading was selected by hindsight. That is ",[123,380,382],{"href":381},"\u002Fglossary\u002Fwhat-is-curve-fitting","curve fitting",", and it is the single largest gap between tested and live performance.",[14,385,115],{"id":114},[10,387,388],{},"A backtest is the cheapest way to reject a bad idea and the most expensive way to confirm a good one. It can establish that a rule set is mechanically coherent, that it survives a rough cost assumption, and that its drawdown profile is something you could sit through. It cannot establish that the edge exists, because every input it uses is a reconstruction and every parameter it uses was chosen after the data was seen.",[10,390,391],{},"Anyone deciding where to put money should treat a backtest as a screening tool with a veto, never as evidence.",[14,393,139],{"id":138},[10,395,396,397,400,401,404],{},"ShowMyTrades publishes ",[144,398,399],{},"10,000+ accounts"," as public pages, resting on ",[144,402,403],{},"15,436,464 synchronised trades"," (August 2026). Not one of them is simulated: every trade in that count was filled by a broker and read back from it.",[10,406,407,408,411,412,415,416,419,420,415,424,426],{},"That published population is overwhelmingly automated — median autotrading share ",[144,409,410],{},"99%",", with 53.9% of accounts running above 90% automation and 42.2% below 10%. The automated portion consists, in the main, of strategies that were backtested before they were funded. Across the whole published set the median ",[123,413,414],{"href":314},"profit factor"," is ",[144,417,418],{},"1.28"," and the median ",[123,421,423],{"href":422},"\u002Fglossary\u002Fwhat-is-the-sharpe-ratio","Sharpe ratio",[144,425,181],{},". Those are the figures the tester reports were competing against.",[10,428,429,430,433,434,437],{},"Costs are the line a simulation most often understates, and here they are billed rather than assumed: ",[144,431,432],{},"$4,782,670"," charged in commission and ",[144,435,436],{},"$862,547"," in swap, with 86.3% of the accounts that carry any swap paying it net negative. A backtest set to zero swap on a strategy that holds positions overnight is not slightly optimistic; it is missing a recurring charge.",[10,439,440],{},[159,441],{"alt":442,"src":443},"Spread, commission and swap as three separate cost lines: $4,782,670 charged in commission and $862,547 in swap across public ShowMyTrades accounts","\u002Fimages\u002Farticles\u002Fwhere-costs-hide.svg",[10,445,446],{},[166,447,448],{},"A tester with a fixed spread and no swap has left out two of the three.",[14,450,190],{"id":189},[10,452,453,454,458],{},"Nowhere, deliberately. ShowMyTrades does not host backtests, upload simulations or accept a strategy report as a ",[123,455,457],{"href":456},"\u002Fglossary\u002Fwhat-is-a-track-record","track record",". Every account page is synced read-only from the broker, which is why the numbers above describe executed trades rather than modelled ones.",[10,460,461,462,217,464,466,467,470,471,217,474,477,478,481,482,485],{},"The modules that expose what a backtest hides are: ",[144,463,238],{},[144,465,241],{}," in the Advanced Statistics block, the real cost of the strategy in account currency; the ",[144,468,469],{},"Terminal"," panel, which reports ",[144,472,473],{},"Ping",[144,475,476],{},"Retransmission"," to the trade server, the conditions your fills were actually obtained under; and ",[144,479,480],{},"Trade History & Balance Progression",", whose ",[144,483,484],{},"Closed Trades"," tab lists each executed order at the price it was genuinely filled at rather than the price a tester would have granted it.",[10,487,488,489,492,493,496],{},"The ",[144,490,491],{},"Track Record Verified"," badge, held by 65 accounts, and ",[144,494,495],{},"Trading Privileges Verified",", held by 264, mark the records where that broker-to-page chain has been checked rather than asserted.",[14,498,253],{"id":252},[255,500,501,507,518,524],{},[258,502,503,506],{},[144,504,505],{},"\"It used every tick, so it is accurate.\""," Tick modelling improves the price path, not the fill. Your broker's spread, execution and rejections are still absent.",[258,508,509,512,513,517],{},[144,510,511],{},"\"It was tested over ten years.\""," ",[123,514,516],{"href":515},"\u002Fguides\u002Fhow-much-history-a-track-record-needs","Length is not independence",". A decade that contained one dominant regime is one observation, not 2,500.",[258,519,520,523],{},[144,521,522],{},"\"Only three parameters were optimised.\""," Three parameters at twenty values each is 8,000 experiments. The winner of 8,000 experiments is partly lucky by construction.",[258,525,526,529],{},[144,527,528],{},"\"The demo forward test confirmed it.\""," Demo servers fill optimistically and never reject. A demo result is a second simulation, not a first live test.",[10,531,532,533,268],{},"Before you trust any performance figure, tested or live, work through ",[123,534,536],{"href":535},"\u002Fguides\u002Fverifying-trading-performance-claims","how to verify trading performance claims",{"title":28,"searchDepth":300,"depth":300,"links":538},[539,540,541,542,543],{"id":16,"depth":300,"text":17},{"id":114,"depth":300,"text":115},{"id":138,"depth":300,"text":139},{"id":189,"depth":300,"text":190},{"id":252,"depth":300,"text":253},"Strategy","Backtesting simulates a trading strategy on historical price data. What it can prove, what it cannot, and why live broker-synced results almost always differ.",{},[548,549,550],"what-is-curve-fitting","what-is-a-verified-track-record","what-is-slippage",{"title":326,"description":545},"5.glossary\u002Fwhat-is-backtesting","Backtesting","he7JKboqSnysaWcJ_U_Uz3xPVvizet9GFQbrgkBSinQ",{"id":556,"title":557,"body":558,"category":307,"date":308,"description":751,"draft":310,"extension":311,"meta":752,"navigation":313,"path":753,"related":754,"seo":757,"stem":758,"term":682,"updated":308,"__hash__":759},"glossary\u002F5.glossary\u002Fwhat-is-drawdown.md","What Is Drawdown? Definition, Formula and Real Numbers",{"type":7,"value":559,"toc":744},[560,563,565,568,574,577,580,611,613,616,622,627,630,641,643,649,664,667,669,691,706,708,737],[10,561,562],{},"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.",[14,564,17],{"id":16},[10,566,567],{},"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.",[19,569,572],{"className":570,"code":571,"language":24},[22],"Drawdown % = (Peak value − Current value) \u002F Peak value × 100\n",[26,573,571],{"__ignoreMap":28},[10,575,576],{},"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.",[10,578,579],{},"Three distinctions decide what the number actually means:",[255,581,582,592,598],{},[258,583,584,587,588,591],{},[144,585,586],{},"Relative vs absolute."," Relative drawdown is the percentage above. Absolute drawdown, as MetaTrader reports it, is the fall below the ",[166,589,590],{},"initial deposit"," in currency — a completely different figure that can read 0% on an account currently 40% below its peak.",[258,593,594,597],{},[144,595,596],{},"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.",[258,599,600,603,604,606,607,610],{},[144,601,602],{},"Current vs maximum."," Current drawdown is where the account sits today. The historical worst is ",[123,605,126],{"href":125},", and it is the figure most ",[123,608,609],{"href":456},"track records"," quote.",[14,612,115],{"id":114},[10,614,615],{},"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%.",[10,617,618],{},[159,619],{"alt":620,"src":621},"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",[10,623,624],{},[166,625,626],{},"Past 50%, the recovery is a bigger job than the loss that caused it.",[10,628,629],{},"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.",[10,631,632,633,217,636,640],{},"And drawdown is the direct output of ",[123,634,635],{"href":277},"position sizing",[123,637,639],{"href":638},"\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.",[14,642,139],{"id":138},[10,644,645,646,268],{},"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 ",[144,647,648],{},"9.7%",[10,650,651,652,415,656,659,660,663],{},"Set that against what the same accounts earned. The median ",[123,653,655],{"href":654},"\u002Fglossary\u002Fwhat-is-time-weighted-return","time-weighted return",[144,657,658],{},"+3.2%",", and ",[144,661,662],{},"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.",[10,665,666],{},"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.",[14,668,190],{"id":189},[10,670,671,672,675,676,679,680,683,684,690],{},"On every published account page, the ",[144,673,674],{},"Account Stats"," panel carries two figures on consecutive rows, immediately below ",[144,677,678],{},"Avg Monthly %",": ",[144,681,682],{},"Drawdown",", measured on equity so floating losses on open positions are included, and ",[144,685,686],{},[123,687,689],{"href":688},"\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.",[10,692,693,694,696,697,700,701,705],{},"The charts module has a ",[144,695,682],{}," view that plots daily drawdown as bars over the life of the account. That is where the ",[166,698,699],{},"duration"," of a decline becomes readable instead of inferred, which no single headline percentage can convey. The ",[123,702,704],{"href":703},"\u002Ftools\u002Fdrawdown-calculator","drawdown calculator"," runs the recovery arithmetic on your own balance.",[14,707,253],{"id":252},[255,709,710,716,722,731],{},[258,711,712,715],{},[144,713,714],{},"\"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.",[258,717,718,721],{},[144,719,720],{},"\"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.",[258,723,724,727,728,268],{},[144,725,726],{},"\"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, ",[123,729,730],{"href":515},"a small drawdown is a sample size, not a risk profile",[258,732,733,736],{},[144,734,735],{},"\"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.",[10,738,739,740,268],{},"For how drawdown reads alongside every other number on an account page, see ",[123,741,743],{"href":742},"\u002Fguides\u002Freading-a-trading-account-dashboard","how to read a trading account dashboard",{"title":28,"searchDepth":300,"depth":300,"links":745},[746,747,748,749,750],{"id":16,"depth":300,"text":17},{"id":114,"depth":300,"text":115},{"id":138,"depth":300,"text":139},{"id":189,"depth":300,"text":190},{"id":252,"depth":300,"text":253},"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.",{},"\u002Fglossary\u002Fwhat-is-drawdown",[317,318,755,756],"what-is-a-stop-loss","what-is-a-profit-factor",{"title":557,"description":751},"5.glossary\u002Fwhat-is-drawdown","DMQq_wxULyvtTewFH3EendlyxckASOfp4LLweDXbTKY",{"id":761,"title":762,"body":763,"category":307,"date":308,"description":1061,"draft":310,"extension":311,"meta":1062,"navigation":313,"path":125,"related":1063,"seo":1064,"stem":1065,"term":1066,"updated":308,"__hash__":1067},"glossary\u002F5.glossary\u002Fwhat-is-maximum-drawdown.md","What Is Maximum Drawdown? Formula and Recovery Maths",{"type":7,"value":764,"toc":1054},[765,772,774,777,783,786,836,842,859,861,864,926,929,936,938,944,950,955,966,993,995,1008,1021,1023,1049],[10,766,767,768,771],{},"Maximum drawdown is the largest ",[123,769,770],{"href":753},"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.",[14,773,17],{"id":16},[10,775,776],{},"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.",[19,778,781],{"className":779,"code":780,"language":24},[22],"MaxDD % = max over t of [ (Peak(0..t) − Value(t)) \u002F Peak(0..t) ] × 100\n",[26,782,780],{"__ignoreMap":28},[10,784,785],{},"The result depends entirely on which curve you walk, and ShowMyTrades publishes both.",[45,787,788,804],{},[48,789,790],{},[51,791,792,795,798,801],{},[54,793,794],{},"Metric",[54,796,797],{},"Measured on",[54,799,800],{},"Open positions counted?",[54,802,803],{},"What it tells you",[61,805,806,821],{},[51,807,808,812,815,818],{},[66,809,810],{},[144,811,682],{},[66,813,814],{},"Equity (balance + floating P&L)",[66,816,817],{},"Yes",[66,819,820],{},"The real fall in what the account was worth at that moment",[51,822,823,827,830,833],{},[66,824,825],{},[144,826,689],{},[66,828,829],{},"Closed balance only",[66,831,832],{},"No",[66,834,835],{},"The fall in realised results",[10,837,838,841],{},[123,839,840],{"href":688},"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.",[10,843,844,845,217,848,851,852,855,856,858],{},"So an account showing ",[144,846,847],{},"Drawdown 41%",[144,849,850],{},"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 ",[166,853,854],{},"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 ",[123,857,639],{"href":638}," is for.",[14,860,115],{"id":114},[10,862,863],{},"Recovery is asymmetric, because the gain has to compound off a smaller base than the loss did.",[45,865,866,876],{},[48,867,868],{},[51,869,870,873],{},[54,871,872],{},"Maximum drawdown",[54,874,875],{},"Gain needed to reach the old peak",[61,877,878,886,894,902,910,918],{},[51,879,880,883],{},[66,881,882],{},"10%",[66,884,885],{},"11.1%",[51,887,888,891],{},[66,889,890],{},"20%",[66,892,893],{},"25.0%",[51,895,896,899],{},[66,897,898],{},"30%",[66,900,901],{},"42.9%",[51,903,904,907],{},[66,905,906],{},"50%",[66,908,909],{},"100.0%",[51,911,912,915],{},[66,913,914],{},"70%",[66,916,917],{},"233.3%",[51,919,920,923],{},[66,921,922],{},"90%",[66,924,925],{},"900.0%",[10,927,928],{},"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.",[10,930,931,932,935],{},"Maximum drawdown is also the number that sets your practical leverage ceiling. If a system has historically drawn down 30%, running it at double ",[123,933,934],{"href":277},"position size"," implies a 60% drawdown you have no evidence you can sit through.",[14,937,139],{"id":138},[10,939,940,941,943],{},"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 ",[144,942,648],{},", and the spread around that median is wide in both directions.",[10,945,946],{},[159,947],{"alt":948,"src":949},"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",[10,951,952],{},[166,953,954],{},"Median 9.7%, and the tail is longer than most published claims allow for.",[10,956,957,958,961,962,965],{},"At the far end, ",[144,959,960],{},"17.6% have fallen more than 50%"," below their peak and ",[144,963,964],{},"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.",[10,967,968,969,972,973,975,976,980,981,984,985,988,989,268],{},"The near end deserves the same scepticism: ",[144,970,971],{},"38.5%"," record a maximum drawdown under 5%. Some of those are genuinely conservative. Many are simply young. The median published account holds ",[144,974,185],{}," at a ",[123,977,979],{"href":978},"\u002Fglossary\u002Fwhat-is-average-trade-length","median trade length"," of ",[144,982,983],{},"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 ",[123,986,987],{"href":515},"tails need history behind them"," — which is why the figure is only worth much on a ",[123,990,992],{"href":991},"\u002Fglossary\u002Fwhat-is-a-verified-track-record","verified track record",[14,994,190],{"id":189},[10,996,488,997,999,1000,217,1002,1004,1005,1007],{},[144,998,674],{}," panel on every published account page shows ",[144,1001,682],{},[144,1003,689],{}," on consecutive rows below ",[144,1006,678],{},", both derived from the broker feed rather than self-reported. Compare them first; the divergence is the fastest read on the page.",[10,1009,1010,1011,1013,1014,1017,1018,1020],{},"The charts module includes a dedicated ",[144,1012,682],{}," view, which plots daily drawdown as bars and so answers the question the headline percentage cannot: how ",[166,1015,1016],{},"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 ",[123,1019,704],{"href":703}," runs the recovery table above against your own balance.",[14,1022,253],{"id":252},[255,1024,1025,1031,1037,1043],{},[258,1026,1027,1030],{},[144,1028,1029],{},"\"My maximum drawdown improved this year.\""," It cannot improve. It is a historical maximum, and a good year cannot un-print it.",[258,1032,1033,1036],{},[144,1034,1035],{},"\"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.",[258,1038,1039,1042],{},[144,1040,1041],{},"\"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.",[258,1044,1045,1048],{},[144,1046,1047],{},"\"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.",[10,1050,1051,1052,268],{},"For maximum drawdown in context with every other metric on a live account page, read ",[123,1053,743],{"href":742},{"title":28,"searchDepth":300,"depth":300,"links":1055},[1056,1057,1058,1059,1060],{"id":16,"depth":300,"text":17},{"id":114,"depth":300,"text":115},{"id":138,"depth":300,"text":139},{"id":189,"depth":300,"text":190},{"id":252,"depth":300,"text":253},"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.",{},[316,318,549,756],{"title":762,"description":1061},"5.glossary\u002Fwhat-is-maximum-drawdown","Maximum Drawdown","ApNMddCmg0QCLnuOwuyL_buXf8nvEi3z-WICzHc5jDU",{"id":1069,"title":1070,"body":1071,"category":1270,"date":308,"description":1271,"draft":310,"extension":311,"meta":1272,"navigation":313,"path":277,"related":1273,"seo":1275,"stem":1276,"term":1277,"updated":308,"__hash__":1278},"glossary\u002F5.glossary\u002Fwhat-is-position-sizing.md","What Is Position Sizing? Formula and Lot Size Calculation",{"type":7,"value":1072,"toc":1263},[1073,1080,1082,1085,1091,1094,1100,1106,1109,1129,1135,1140,1142,1145,1153,1155,1170,1173,1186,1188,1195,1223,1225,1256],[10,1074,1075,1076,1079],{},"Position sizing is the decision of how large a trade to open, derived from how much of the account you are willing to lose if the trade fails. It converts a risk percentage into a lot size using two inputs: the distance to your stop and the value of one pip at that size. It is the single variable that determines an account's ",[123,1077,1078],{"href":753},"drawdown"," profile, and it is chosen before the trade rather than discovered after it.",[14,1081,17],{"id":16},[10,1083,1084],{},"Three steps, in order.",[19,1086,1089],{"className":1087,"code":1088,"language":24},[22],"1. Risk amount   = Account balance × Risk %\n2. Pip value     = Contract size × Pip in quote currency × FX rate to account currency\n3. Position size = Risk amount \u002F (Stop distance in pips × Pip value per lot)\n",[26,1090,1088],{"__ignoreMap":28},[10,1092,1093],{},"A worked example on a $10,000 account risking 1% per trade, with a 50-pip stop on EUR\u002FUSD, where one standard lot moves $10 per pip:",[19,1095,1098],{"className":1096,"code":1097,"language":24},[22],"Risk amount   = 10,000 × 0.01      = $100\nPosition size = 100 \u002F (50 × 10)    = 0.20 lots\n",[26,1099,1097],{"__ignoreMap":28},[10,1101,1102,1103,1105],{},"Widen the stop to 100 pips and the same $100 of risk buys 0.10 lots. The risk stays constant; the size adapts. That inversion is the whole idea, and it is why sizing and ",[123,1104,639],{"href":638}," placement cannot be decided separately.",[10,1107,1108],{},"Three methods dominate in practice:",[255,1110,1111,1117,1123],{},[258,1112,1113,1116],{},[144,1114,1115],{},"Fixed lot."," Always 0.10 lots, whatever the stop or the balance. Simple, and the risk per trade drifts constantly as both change.",[258,1118,1119,1122],{},[144,1120,1121],{},"Percentage risk (fixed fractional)."," The formula above. Risk stays proportional, so losses shrink in currency terms as the account falls — the mechanism that makes recovery arithmetically possible.",[258,1124,1125,1128],{},[144,1126,1127],{},"Martingale progression."," Size increases after a loss to recover it. Wins are frequent and small, the equity curve looks immaculate, and the distribution of outcomes has a fat left tail that arrives all at once.",[10,1130,1131],{},[159,1132],{"alt":1133,"src":1134},"Doubling the lot size after every loss against a fixed fraction of equity: same win rate, same market, opposite outcomes","\u002Fimages\u002Farticles\u002Flot-progression.svg",[10,1136,1137],{},[166,1138,1139],{},"Which one an account uses is readable from the lot sizes alone.",[14,1141,115],{"id":114},[10,1143,1144],{},"Entries decide whether you win. Sizing decides whether you are still there for the next one. Two traders taking identical signals with identical stops produce identical win rates and completely different accounts, because one risked 0.5% and the other risked 8%.",[10,1146,1147,1148,1152],{},"Sizing is also where ",[123,1149,1151],{"href":1150},"\u002Fglossary\u002Fwhat-is-leverage","leverage"," does its actual damage. High leverage is not itself risk — it is permission to take risk. The risk arrives when that permission is used to open a size whose stop distance implies a loss the account cannot absorb twice in a row.",[14,1154,139],{"id":138},[10,1156,1157,1158,1161,1162,1165,1166,1169],{},"Sizing leaves its signature in the drawdown tail. Across the accounts published on ShowMyTrades that have trading history (August 2026) — accounts published here, not traders in general — ",[144,1159,1160],{},"38.2%"," have been ",[123,1163,1164],{"href":125},"more than 20% underwater"," at some point and ",[144,1167,1168],{},"17.6%"," have lost more than half their peak value.",[10,1171,1172],{},"A properly sized fixed-fractional account rarely reaches that last band. Losing 50% at 1% risk per trade requires roughly 69 consecutive losses. Accounts in that tail generally arrived another way: escalating size after losses, or a size chosen without reference to the stop at all.",[10,1174,1175,1176,659,1178,1181,1182,1185],{},"Context for who is doing the sizing: the median autotrading share on these accounts is ",[144,1177,410],{},[144,1179,1180],{},"53.9%"," run above 90% automated, against ",[144,1183,1184],{},"42.2%"," under 10%. On more than half of the published set, position size is a line in an EA's settings — configured once and never revisited as the balance moves.",[14,1187,190],{"id":189},[10,1189,488,1190,1194],{},[123,1191,1193],{"href":1192},"\u002Ftools\u002Fposition-size-calculator","position size calculator"," runs the formula above with live prices, in your account currency, for percentage or fixed-amount risk and for stops expressed in price or pips.",[10,1196,1197,1198,1201,1202,1205,1206,1208,1209,1212,1213,1219,1220,1222],{},"On a published account page you can audit sizing rather than assume it. The ",[144,1199,1200],{},"trades table"," carries a ",[144,1203,1204],{},"Volume"," column showing the lot size of every individual trade, so a size that steps up after each loser is visible directly. ",[144,1207,248],{}," adds a ",[144,1210,1211],{},"Lot Size"," min\u002Fmax filter: set a floor above the account's normal size and see whether the surviving trades cluster immediately after losses, which is the martingale signature. ",[144,1214,1215],{},[123,1216,1218],{"href":1217},"\u002Fguides\u002Ftrading-volume-analysis","Total Lots"," in the ",[144,1221,199],{}," module gives the aggregate; across published accounts it stands at 1,724,575 lots traded.",[14,1224,253],{"id":252},[255,1226,1227,1233,1244,1250],{},[258,1228,1229,1232],{},[144,1230,1231],{},"\"Risking 2% means using 2% of my account.\""," No. 2% is the loss if the stop is hit. The margin the position occupies is a separate figure entirely, set by leverage.",[258,1234,1235,1238,1239,1243],{},[144,1236,1237],{},"\"I risk 1% per trade, so my worst case is 1%.\""," Only with one position open. ",[123,1240,1242],{"href":1241},"\u002Fglossary\u002Fwhat-is-correlation-risk","Five correlated positions"," at 1% each are one 5% trade wearing a disguise, and correlated pairs move together precisely when it hurts.",[258,1245,1246,1249],{},[144,1247,1248],{},"\"No stop loss, so no risk to calculate.\""," Without a stop, the position size formula has no denominator — the risk is not small, it is undefined, and its true value is the margin call.",[258,1251,1252,1255],{},[144,1253,1254],{},"\"Compounding means scaling up.\""," Fixed-fractional sizing scales both ways. Increasing lots after wins while holding them constant after losses is not compounding; it is a slow ratchet toward a drawdown you never sized for.",[10,1257,1258,1259,268],{},"For the full set of risk and sizing tools and when each one applies, see ",[123,1260,1262],{"href":1261},"\u002Fguides\u002Fforex-calculators-guide","the forex calculators guide",{"title":28,"searchDepth":300,"depth":300,"links":1264},[1265,1266,1267,1268,1269],{"id":16,"depth":300,"text":17},{"id":114,"depth":300,"text":115},{"id":138,"depth":300,"text":139},{"id":189,"depth":300,"text":190},{"id":252,"depth":300,"text":253},"Risk","Position sizing turns a risk percentage into a lot size using your stop distance and pip value. The formula, the three common methods, and what bad sizing costs.",{},[316,317,755,1274],"what-is-leverage",{"title":1070,"description":1271},"5.glossary\u002Fwhat-is-position-sizing","Position Sizing","qP5mfGAxSuWSiccKuy0i_N8LQtpN2UHwOG-ZOVxOViU",1787415690652]