[{"data":1,"prerenderedAt":1304},["ShallowReactive",2],{"\u002Fglossary\u002Fwhat-is-an-equity-curve":3,"\u002Fglossary\u002Fwhat-is-an-equity-curve-related":300},{"id":4,"title":5,"body":6,"category":284,"date":285,"description":286,"draft":287,"extension":288,"meta":289,"navigation":287,"path":290,"related":291,"seo":296,"stem":297,"term":298,"updated":285,"__hash__":299},"glossary\u002F5.glossary\u002Fwhat-is-an-equity-curve.md","What Is an Equity Curve? How to Read the Shape",{"type":7,"value":8,"toc":276},"minimark",[9,13,18,29,32,39,45,54,57,91,95,103,106,110,129,145,156,160,184,205,230,234,269],[10,11,12],"p",{},"An equity curve is a chart of an account's value over time. On a serious account page it is drawn as two lines rather than one: balance, which counts only closed trades, and equity, which adds the floating profit and loss of everything still open. The distance between them is the part of the story the account has not admitted yet.",[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","Equity = Balance + Floating P&L on open positions\n","text",[26,27,23],"code",{"__ignoreMap":28},"",[10,30,31],{},"When nothing is open, the two lines sit on top of each other. When positions are open, equity moves and balance does not. A losing position that is never closed keeps the balance line flat and pushes the equity line down; closing it drops the balance line to meet equity, which is why a \"sudden\" loss on a balance chart is usually weeks old.",[10,33,34],{},[35,36],"img",{"alt":37,"src":38},"A smooth balance line with the equity line pulled below it by positions still open at a loss","\u002Fimages\u002Farticles\u002Fequity-vs-balance.svg",[10,40,41],{},[42,43,44],"em",{},"A balance line stays tidy for as long as the losers stay open.",[10,46,47,48,53],{},"Deposits and withdrawals move both lines vertically without any trading happening, which is why a raw curve cannot be read as a return. That correction is what ",[49,50,52],"a",{"href":51},"\u002Fglossary\u002Fwhat-is-time-weighted-return","time-weighted return"," exists to make.",[10,55,56],{},"The shape carries as much information as the endpoint:",[58,59,60,68,74,85],"ul",{},[61,62,63,67],"li",{},[64,65,66],"strong",{},"Jagged, rising, with visible pullbacks."," Normal. Every strategy has losing runs, and their absence is the anomaly.",[61,69,70,73],{},[64,71,72],{},"A near-straight diagonal on the balance line."," A warning, not a compliment. It usually means losers are held open while winners are closed — grid, averaging-down or martingale behaviour — and the risk has moved into the equity line where a balance-only chart cannot show it.",[61,75,76,79,80,84],{},[64,77,78],{},"Long flat stretches broken by vertical steps."," Position sizing changed, or the account traded rarely and heavily. ",[49,81,83],{"href":82},"\u002Fguides\u002Fhow-much-history-a-track-record-needs","Read the trade count before reading the slope",".",[61,86,87,90],{},[64,88,89],{},"A clean climb that ends abruptly."," The classic single-blow-up shape: many small wins funding one loss large enough to end the account.",[14,92,94],{"id":93},"why-it-matters","Why it matters",[10,96,97,98,102],{},"The curve is where duration becomes visible. A headline number tells you the worst ",[49,99,101],{"href":100},"\u002Fglossary\u002Fwhat-is-drawdown","drawdown"," was 18%; only the curve tells you it lasted nine months, which is the part people actually quit over.",[10,104,105],{},"It is also the fastest lie detector on a track record. Claims are made about returns, rarely about shape, and the shape is much harder to manufacture — a balance line that has never had a bad week either did not trade through one or is not closing its bad trades.",[14,107,109],{"id":108},"what-the-data-shows","What the data shows",[10,111,112,113,116,117,120,121,124,125,128],{},"The figures below describe accounts published on ShowMyTrades, not traders in general. Across the published accounts that have trading history (August 2026), the ",[64,114,115],{},"median deepest drawdown is 9.7%"," measured on equity. ",[64,118,119],{},"38.5%"," of accounts have never been more than 5% below their own peak, ",[64,122,123],{},"38.2%"," have been more than 20% below it, and ",[64,126,127],{},"17.6%"," more than 50% below.",[10,130,131,132,135,136,140,141,144],{},"Set that beside a ",[64,133,134],{},"median time-weighted return of +3.2%"," and the honest shape appears: modest slope, real dents, and ",[49,137,139],{"href":138},"\u002Fglossary\u002Fwhat-is-recovery-factor","a worst dent several times larger than the eventual gain",". The median account arrived there over ",[64,142,143],{},"171 closed trades",", which is the context every smooth-looking curve has to be read against — the fewer trades behind a curve, the less its smoothness can mean.",[10,146,147,148,151,152,155],{},"The equity-versus-balance gap is measurable too. Every account carries both a ",[64,149,150],{},"Drawdown"," figure on equity and a ",[64,153,154],{},"DD on Balance"," figure on closed results only. A wide gap between the two is the numeric version of the straight-diagonal warning: the balance line is being kept tidy by positions that are still open.",[14,157,159],{"id":158},"where-you-see-it-on-showmytrades","Where you see it on ShowMyTrades",[10,161,162,163,166,167,170,171,170,174,170,177,180,181,183],{},"The ",[64,164,165],{},"charts viewer"," on every published account page is a single panel that switches between five views — ",[64,168,169],{},"Growth",", ",[64,172,173],{},"Balance",[64,175,176],{},"Profit",[64,178,179],{},"Growth by Trade"," and ",[64,182,150],{}," — rather than a stack of separate charts.",[10,185,186,188,189,180,191,194,195,197,198,200,201,204],{},[64,187,173],{}," is the equity curve proper. It draws two named series, ",[64,190,173],{},[64,192,193],{},"Equity",", with a legend, so the floating gap is visible rather than inferred; deposits and withdrawals are marked on the line, so a jump reads as funding rather than trading. ",[64,196,169],{}," replots the same account as compounded time-weighted return, with cash flows removed. ",[64,199,150],{}," plots the daily distance below the high-water mark as bars, which is where the ",[42,202,203],{},"length"," of a decline is readable.",[10,206,207,208,211,212,170,214,216,217,220,221,180,223,225,226,229],{},"The numeric anchors are in the ",[64,209,210],{},"Account Stats"," panel: ",[64,213,173],{},[64,215,193],{}," — printed as a percentage of balance alongside the amount, so a large floating loss is obvious at a glance — and ",[64,218,219],{},"Highest $",", the peak the account has ever reached. ",[64,222,150],{},[64,224,154],{}," sit on the two rows below ",[64,227,228],{},"Avg Monthly %"," in the same panel.",[14,231,233],{"id":232},"common-misunderstandings","Common misunderstandings",[58,235,236,246,252,263],{},[61,237,238,241,242,84],{},[64,239,240],{},"\"A smooth equity curve means low risk.\""," It often means the opposite. Smoothness on the balance line is the signature of never realising a loss, and the risk is sitting in the equity line and in ",[49,243,245],{"href":244},"\u002Fglossary\u002Fwhat-is-maximum-drawdown","maximum drawdown",[61,247,248,251],{},[64,249,250],{},"\"The equity curve is the balance chart.\""," Balance is closed trades only. Equity includes open ones, and the difference is exactly the amount not yet accounted for.",[61,253,254,257,258,262],{},[64,255,256],{},"\"The curve rose, so the trading worked.\""," Not until deposits are removed. That is why Gain on our pages is time-weighted and ",[49,259,261],{"href":260},"\u002Fglossary\u002Fwhat-is-absolute-gain","Abs. Gain"," is shown separately.",[61,264,265,268],{},[64,266,267],{},"\"A new high means the account recovered.\""," It means balance recovered. If it was reached by increasing position size after a loss, the account did not recover — it doubled down and got away with it.",[10,270,271,272,84],{},"For how a curve's shape gives away a manufactured result, see ",[49,273,275],{"href":274},"\u002Fguides\u002Fspotting-fake-ea-results","spotting fake EA results",{"title":28,"searchDepth":277,"depth":277,"links":278},2,[279,280,281,282,283],{"id":16,"depth":277,"text":17},{"id":93,"depth":277,"text":94},{"id":108,"depth":277,"text":109},{"id":158,"depth":277,"text":159},{"id":232,"depth":277,"text":233},"Metrics","2026-08-19T00:00:00.000Z","An equity curve plots account value over time. The gap between the balance line and the equity line is where hidden losses live. What public accounts show.",true,"md",{},"\u002Fglossary\u002Fwhat-is-an-equity-curve",[292,293,294,295],"what-is-time-weighted-return","what-is-drawdown","what-is-maximum-drawdown","what-is-a-profit-factor",{"title":5,"description":286},"5.glossary\u002Fwhat-is-an-equity-curve","Equity Curve","oMmcx1zz2Z_azfQbvDq8VzDwHBifFJwBHIMfz8JKzFc",[301,583,782,1090],{"id":302,"title":303,"body":304,"category":284,"date":285,"description":573,"draft":574,"extension":288,"meta":575,"navigation":287,"path":576,"related":577,"seo":580,"stem":581,"term":469,"updated":285,"__hash__":582},"glossary\u002F5.glossary\u002Fwhat-is-a-profit-factor.md","What Is Profit Factor? Formula, Good Values, Real Data",{"type":7,"value":305,"toc":566},[306,309,311,317,320,323,329,332,400,402,405,411,419,421,435,441,446,453,463,465,494,522,524,559],[10,307,308],{},"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.",[14,310,17],{"id":16},[19,312,315],{"className":313,"code":314,"language":24},[22],"Profit Factor = Gross Profit \u002F |Gross Loss|\n",[26,316,314],{"__ignoreMap":28},[10,318,319],{},"Note what the formula ignores: how long the account traded, how much capital it used, and how deep it fell along the way.",[10,321,322],{},"It can also be written in terms of win rate and average trade size, which is where it becomes diagnostic:",[19,324,327],{"className":325,"code":326,"language":24},[22],"Profit Factor = (Win Rate × Avg Win) \u002F ((1 − Win Rate) × Avg Loss)\n",[26,328,326],{"__ignoreMap":28},[10,330,331],{},"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.",[333,334,335,348],"table",{},[336,337,338],"thead",{},[339,340,341,345],"tr",{},[342,343,344],"th",{},"Profit factor",[342,346,347],{},"Reading",[349,350,351,360,368,376,384,392],"tbody",{},[339,352,353,357],{},[354,355,356],"td",{},"Below 1.00",[354,358,359],{},"Loses money — structurally, not marginally",[339,361,362,365],{},[354,363,364],{},"1.00 – 1.10",[354,366,367],{},"Inside the noise. One bad week erases it",[339,369,370,373],{},[354,371,372],{},"1.10 – 1.30",[354,374,375],{},"Thin but real edge, if the sample is large",[339,377,378,381],{},[354,379,380],{},"1.30 – 2.00",[354,382,383],{},"A working strategy",[339,385,386,389],{},[354,387,388],{},"2.00 – 3.00",[354,390,391],{},"Strong. Check trade count and cost accounting",[339,393,394,397],{},[354,395,396],{},"Above 3.00",[354,398,399],{},"Rare on long histories: usually a short sample, a few outsized winners, or open losers not yet realised",[14,401,94],{"id":93},[10,403,404],{},"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.",[10,406,407,408,410],{},"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 ",[49,409,245],{"href":244},", or you are measuring the destination without the trip.",[10,412,413,414,418],{},"The same caution applies to a profit factor quoted from a ",[49,415,417],{"href":416},"\u002Fglossary\u002Fwhat-is-backtesting","backtest",": optimisers maximise exactly this ratio, so a high backtested value often measures the fitting process rather than the strategy.",[14,420,109],{"id":108},[10,422,112,423,426,427,434],{},[64,424,425],{},"median profit factor is 1.28"," and the ",[64,428,429,433],{},[49,430,432],{"href":431},"\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.",[10,436,437],{},[35,438],{"alt":439,"src":440},"Medians across public ShowMyTrades accounts: a 68.8% win rate beside a 1.28 profit factor","\u002Fimages\u002Farticles\u002Fwin-rate-vs-payoff.svg",[10,442,443],{},[42,444,445],{},"Two medians from the same set: the win rate looks strong, the edge behind it is thin.",[10,447,448,449,452],{},"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 ",[64,450,451],{},"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.",[10,454,455,456,459,460,462],{},"The median Sharpe ratio on the same set is ",[64,457,458],{},"0.05",", and the median account has ",[64,461,143],{},". 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.",[14,464,159],{"id":158},[10,466,467,470,471,474,475,170,478,170,481,170,484,170,487,180,490,493],{},[64,468,469],{},"Profit Factor"," sits in the ",[64,472,473],{},"Advanced Statistics"," module on every published account page, alongside the numbers that explain it: ",[64,476,477],{},"Win Rate",[64,479,480],{},"Avg. Win",[64,482,483],{},"Avg. Loss",[64,485,486],{},"Expectancy",[64,488,489],{},"Total Trades",[64,491,492],{},"Sharpe Ratio",". The six together say what the single ratio cannot.",[10,495,496,497,500,501,180,504,507,508,180,511,514,515,521],{},"Two product details matter. First, the costs already inside the ratio are itemised separately: the trades table carries ",[64,498,499],{},"Profit (Gross)"," with ",[64,502,503],{},"Swap",[64,505,506],{},"Commission"," as their own columns, and Advanced Statistics totals ",[64,509,510],{},"Total Commissions",[64,512,513],{},"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, ",[49,516,518],{"href":517},"\u002Fguides\u002Fcustom-analysis-and-filter-presets",[64,519,520],{},"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.",[14,523,233],{"id":232},[58,525,526,536,547,553],{},[61,527,528,531,532,84],{},[64,529,530],{},"\"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 ",[49,533,535],{"href":534},"\u002Fglossary\u002Fwhat-is-cost-percentage","once commission and swap are applied",[61,537,538,541,542,546],{},[64,539,540],{},"\"A high profit factor means low risk.\""," It says nothing about drawdown, position size or sequence. A martingale ",[49,543,545],{"href":544},"\u002Fglossary\u002Fwhat-is-position-sizing","position-sizing"," progression can post 4.00 right up to the day it does not.",[61,548,549,552],{},[64,550,551],{},"\"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.",[61,554,555,558],{},[64,556,557],{},"\"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.",[10,560,561,562,84],{},"For which metrics to track over time and in what order, see ",[49,563,565],{"href":564},"\u002Fguides\u002Ftracking-trading-performance","the guide to tracking trading performance",{"title":28,"searchDepth":277,"depth":277,"links":567},[568,569,570,571,572],{"id":16,"depth":277,"text":17},{"id":93,"depth":277,"text":94},{"id":108,"depth":277,"text":109},{"id":158,"depth":277,"text":159},{"id":232,"depth":277,"text":233},"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,{},"\u002Fglossary\u002Fwhat-is-a-profit-factor",[293,294,578,579],"what-is-position-sizing","what-is-backtesting",{"title":303,"description":573},"5.glossary\u002Fwhat-is-a-profit-factor","0loLRuqRU0mx9nEOfjdEFW6U1Fb_JAC1jN2JQSkIjuE",{"id":584,"title":585,"body":586,"category":284,"date":285,"description":775,"draft":574,"extension":288,"meta":776,"navigation":287,"path":100,"related":777,"seo":779,"stem":780,"term":150,"updated":285,"__hash__":781},"glossary\u002F5.glossary\u002Fwhat-is-drawdown.md","What Is Drawdown? Definition, Formula and Real Numbers",{"type":7,"value":587,"toc":768},[588,591,593,596,602,605,608,640,642,645,651,656,659,670,672,678,692,695,697,715,730,732,761],[10,589,590],{},"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.",[14,592,17],{"id":16},[10,594,595],{},"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.",[19,597,600],{"className":598,"code":599,"language":24},[22],"Drawdown % = (Peak value − Current value) \u002F Peak value × 100\n",[26,601,599],{"__ignoreMap":28},[10,603,604],{},"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.",[10,606,607],{},"Three distinctions decide what the number actually means:",[58,609,610,620,626],{},[61,611,612,615,616,619],{},[64,613,614],{},"Relative vs absolute."," Relative drawdown is the percentage above. Absolute drawdown, as MetaTrader reports it, is the fall below the ",[42,617,618],{},"initial deposit"," in currency — a completely different figure that can read 0% on an account currently 40% below its peak.",[61,621,622,625],{},[64,623,624],{},"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.",[61,627,628,631,632,634,635,639],{},[64,629,630],{},"Current vs maximum."," Current drawdown is where the account sits today. The historical worst is ",[49,633,245],{"href":244},", and it is the figure most ",[49,636,638],{"href":637},"\u002Fglossary\u002Fwhat-is-a-track-record","track records"," quote.",[14,641,94],{"id":93},[10,643,644],{},"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%.",[10,646,647],{},[35,648],{"alt":649,"src":650},"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",[10,652,653],{},[42,654,655],{},"Past 50%, the recovery is a bigger job than the loss that caused it.",[10,657,658],{},"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.",[10,660,661,662,180,665,669],{},"And drawdown is the direct output of ",[49,663,664],{"href":544},"position sizing",[49,666,668],{"href":667},"\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.",[14,671,109],{"id":108},[10,673,674,675,84],{},"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 ",[64,676,677],{},"9.7%",[10,679,680,681,683,684,687,688,691],{},"Set that against what the same accounts earned. The median ",[49,682,52],{"href":51}," is ",[64,685,686],{},"+3.2%",", and ",[64,689,690],{},"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.",[10,693,694],{},"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.",[14,696,159],{"id":158},[10,698,699,700,702,703,705,706,708,709,714],{},"On every published account page, the ",[64,701,210],{}," panel carries two figures on consecutive rows, immediately below ",[64,704,228],{},": ",[64,707,150],{},", measured on equity so floating losses on open positions are included, and ",[64,710,711],{},[49,712,154],{"href":713},"\u002Fglossary\u002Fwhat-is-drawdown-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.",[10,716,717,718,720,721,724,725,729],{},"The charts module has a ",[64,719,150],{}," view that plots daily drawdown as bars over the life of the account. That is where the ",[42,722,723],{},"duration"," of a decline becomes readable instead of inferred, which no single headline percentage can convey. The ",[49,726,728],{"href":727},"\u002Ftools\u002Fdrawdown-calculator","drawdown calculator"," runs the recovery arithmetic on your own balance.",[14,731,233],{"id":232},[58,733,734,740,746,755],{},[61,735,736,739],{},[64,737,738],{},"\"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.",[61,741,742,745],{},[64,743,744],{},"\"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.",[61,747,748,751,752,84],{},[64,749,750],{},"\"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, ",[49,753,754],{"href":82},"a small drawdown is a sample size, not a risk profile",[61,756,757,760],{},[64,758,759],{},"\"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.",[10,762,763,764,84],{},"For how drawdown reads alongside every other number on an account page, see ",[49,765,767],{"href":766},"\u002Fguides\u002Freading-a-trading-account-dashboard","how to read a trading account dashboard",{"title":28,"searchDepth":277,"depth":277,"links":769},[770,771,772,773,774],{"id":16,"depth":277,"text":17},{"id":93,"depth":277,"text":94},{"id":108,"depth":277,"text":109},{"id":158,"depth":277,"text":159},{"id":232,"depth":277,"text":233},"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.",{},[294,578,778,295],"what-is-a-stop-loss",{"title":585,"description":775},"5.glossary\u002Fwhat-is-drawdown","DMQq_wxULyvtTewFH3EendlyxckASOfp4LLweDXbTKY",{"id":783,"title":784,"body":785,"category":284,"date":285,"description":1082,"draft":574,"extension":288,"meta":1083,"navigation":287,"path":244,"related":1084,"seo":1086,"stem":1087,"term":1088,"updated":285,"__hash__":1089},"glossary\u002F5.glossary\u002Fwhat-is-maximum-drawdown.md","What Is Maximum Drawdown? Formula and Recovery Maths",{"type":7,"value":786,"toc":1075},[787,794,796,799,805,808,858,864,881,883,886,948,951,958,960,966,972,977,988,1014,1016,1029,1042,1044,1070],[10,788,789,790,793],{},"Maximum drawdown is the largest ",[49,791,792],{"href":100},"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.",[14,795,17],{"id":16},[10,797,798],{},"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.",[19,800,803],{"className":801,"code":802,"language":24},[22],"MaxDD % = max over t of [ (Peak(0..t) − Value(t)) \u002F Peak(0..t) ] × 100\n",[26,804,802],{"__ignoreMap":28},[10,806,807],{},"The result depends entirely on which curve you walk, and ShowMyTrades publishes both.",[333,809,810,826],{},[336,811,812],{},[339,813,814,817,820,823],{},[342,815,816],{},"Metric",[342,818,819],{},"Measured on",[342,821,822],{},"Open positions counted?",[342,824,825],{},"What it tells you",[349,827,828,843],{},[339,829,830,834,837,840],{},[354,831,832],{},[64,833,150],{},[354,835,836],{},"Equity (balance + floating P&L)",[354,838,839],{},"Yes",[354,841,842],{},"The real fall in what the account was worth at that moment",[339,844,845,849,852,855],{},[354,846,847],{},[64,848,154],{},[354,850,851],{},"Closed balance only",[354,853,854],{},"No",[354,856,857],{},"The fall in realised results",[10,859,860,863],{},[49,861,862],{"href":713},"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.",[10,865,866,867,180,870,873,874,877,878,880],{},"So an account showing ",[64,868,869],{},"Drawdown 41%",[64,871,872],{},"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 ",[42,875,876],{},"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 ",[49,879,668],{"href":667}," is for.",[14,882,94],{"id":93},[10,884,885],{},"Recovery is asymmetric, because the gain has to compound off a smaller base than the loss did.",[333,887,888,898],{},[336,889,890],{},[339,891,892,895],{},[342,893,894],{},"Maximum drawdown",[342,896,897],{},"Gain needed to reach the old peak",[349,899,900,908,916,924,932,940],{},[339,901,902,905],{},[354,903,904],{},"10%",[354,906,907],{},"11.1%",[339,909,910,913],{},[354,911,912],{},"20%",[354,914,915],{},"25.0%",[339,917,918,921],{},[354,919,920],{},"30%",[354,922,923],{},"42.9%",[339,925,926,929],{},[354,927,928],{},"50%",[354,930,931],{},"100.0%",[339,933,934,937],{},[354,935,936],{},"70%",[354,938,939],{},"233.3%",[339,941,942,945],{},[354,943,944],{},"90%",[354,946,947],{},"900.0%",[10,949,950],{},"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.",[10,952,953,954,957],{},"Maximum drawdown is also the number that sets your practical leverage ceiling. If a system has historically drawn down 30%, running it at double ",[49,955,956],{"href":544},"position size"," implies a 60% drawdown you have no evidence you can sit through.",[14,959,109],{"id":108},[10,961,962,963,965],{},"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 ",[64,964,677],{},", and the spread around that median is wide in both directions.",[10,967,968],{},[35,969],{"alt":970,"src":971},"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",[10,973,974],{},[42,975,976],{},"Median 9.7%, and the tail is longer than most published claims allow for.",[10,978,979,980,983,984,987],{},"At the far end, ",[64,981,982],{},"17.6% have fallen more than 50%"," below their peak and ",[64,985,986],{},"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.",[10,989,990,991,993,994,996,997,1001,1002,1005,1006,1009,1010,84],{},"The near end deserves the same scepticism: ",[64,992,119],{}," record a maximum drawdown under 5%. Some of those are genuinely conservative. Many are simply young. The median published account holds ",[64,995,143],{}," at a ",[49,998,1000],{"href":999},"\u002Fglossary\u002Fwhat-is-average-trade-length","median trade length"," of ",[64,1003,1004],{},"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 ",[49,1007,1008],{"href":82},"tails need history behind them"," — which is why the figure is only worth much on a ",[49,1011,1013],{"href":1012},"\u002Fglossary\u002Fwhat-is-a-verified-track-record","verified track record",[14,1015,159],{"id":158},[10,1017,162,1018,1020,1021,180,1023,1025,1026,1028],{},[64,1019,210],{}," panel on every published account page shows ",[64,1022,150],{},[64,1024,154],{}," on consecutive rows below ",[64,1027,228],{},", both derived from the broker feed rather than self-reported. Compare them first; the divergence is the fastest read on the page.",[10,1030,1031,1032,1034,1035,1038,1039,1041],{},"The charts module includes a dedicated ",[64,1033,150],{}," view, which plots daily drawdown as bars and so answers the question the headline percentage cannot: how ",[42,1036,1037],{},"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 ",[49,1040,728],{"href":727}," runs the recovery table above against your own balance.",[14,1043,233],{"id":232},[58,1045,1046,1052,1058,1064],{},[61,1047,1048,1051],{},[64,1049,1050],{},"\"My maximum drawdown improved this year.\""," It cannot improve. It is a historical maximum, and a good year cannot un-print it.",[61,1053,1054,1057],{},[64,1055,1056],{},"\"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.",[61,1059,1060,1063],{},[64,1061,1062],{},"\"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.",[61,1065,1066,1069],{},[64,1067,1068],{},"\"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.",[10,1071,1072,1073,84],{},"For maximum drawdown in context with every other metric on a live account page, read ",[49,1074,767],{"href":766},{"title":28,"searchDepth":277,"depth":277,"links":1076},[1077,1078,1079,1080,1081],{"id":16,"depth":277,"text":17},{"id":93,"depth":277,"text":94},{"id":108,"depth":277,"text":109},{"id":158,"depth":277,"text":159},{"id":232,"depth":277,"text":233},"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.",{},[293,578,1085,295],"what-is-a-verified-track-record",{"title":784,"description":1082},"5.glossary\u002Fwhat-is-maximum-drawdown","Maximum Drawdown","ApNMddCmg0QCLnuOwuyL_buXf8nvEi3z-WICzHc5jDU",{"id":1091,"title":1092,"body":1093,"category":284,"date":285,"description":1295,"draft":287,"extension":288,"meta":1296,"navigation":287,"path":51,"related":1297,"seo":1300,"stem":1301,"term":1302,"updated":285,"__hash__":1303},"glossary\u002F5.glossary\u002Fwhat-is-time-weighted-return.md","What Is Time-Weighted Return (TWR)?",{"type":7,"value":1094,"toc":1288},[1095,1102,1104,1107,1113,1116,1123,1129,1134,1142,1148,1151,1153,1156,1166,1168,1176,1196,1209,1211,1228,1249,1251,1281],[10,1096,1097,1098,1101],{},"Time-weighted return, or TWR, measures the return produced by trading decisions alone, with deposits and withdrawals removed. It cuts the account's history at every cash flow, measures each piece separately, and compounds the pieces together. It is the number shown as ",[64,1099,1100],{},"Gain"," on ShowMyTrades account pages.",[14,1103,17],{"id":16},[10,1105,1106],{},"Money moving in or out changes the balance without anyone trading. TWR handles that by never letting a cash flow enter a return calculation:",[19,1108,1111],{"className":1109,"code":1110,"language":24},[22],"TWR = [(1 + r₁) × (1 + r₂) × … × (1 + rₙ)] − 1\n\nrᵢ = Profit in period i \u002F Balance at the start of period i\n",[26,1112,1110],{"__ignoreMap":28},[10,1114,1115],{},"Each period runs between cash flows. A deposit ends one period and starts the next at the new, larger balance; it never appears in a numerator. On ShowMyTrades the sub-periods are days: each day's return is measured against the balance standing at its start, net of the costs charged inside it, and the days are compounded.",[10,1117,1118,1119,1122],{},"Worth stating plainly. Fund an account with $10,000 and make $2,000: the first period returned 20%. Deposit another $10,000, taking the balance to $22,000, then make $2,000 again: the second period returned 9.1%, because the base was larger. The balance shows +$4,000 on $20,000 put in. TWR shows (1 + 0.20) × (1 + 0.091) − 1 = ",[64,1120,1121],{},"+30.9%",". The deposit itself earned nothing.",[10,1124,1125],{},[35,1126],{"alt":1127,"src":1128},"A $10,000 deposit steps the balance line up while the time-weighted return line stays exactly where it was","\u002Fimages\u002Farticles\u002Fdeposit-vs-twr.svg",[10,1130,1131],{},[42,1132,1133],{},"The balance jumps the day money arrives. Gain does not.",[10,1135,1136,1137,1141],{},"This is what separates it from ",[64,1138,1139],{},[49,1140,261],{"href":260},", the other percentage on the same panel:",[19,1143,1146],{"className":1144,"code":1145,"language":24},[22],"Abs. Gain = Net closed P&L \u002F Total deposits × 100\n",[26,1147,1145],{"__ignoreMap":28},[10,1149,1150],{},"Abs. Gain answers what the account returned on the money put in; TWR answers how well the money was traded. Both are honest, but only one is comparable across accounts of different sizes and funding patterns.",[14,1152,94],{"id":93},[10,1154,1155],{},"TWR is the reason a track record can be compared at all. Without it, a percentage can be improved by depositing into a drawdown: a $5,000 loss on a $10,000 account is −50%, and a $10,000 top-up the next day makes the same unrecovered hole read as −33% of the new balance.",[10,1157,1158,1159,1162,1163,1165],{},"It cuts the other way too, which is why it is the fair number rather than the flattering one. A withdrawal does not raise TWR, and a well-timed deposit before a good month does not either. What remains is the ",[49,1160,1161],{"href":290},"equity curve"," of decisions — the only part a reader of a ",[49,1164,1013],{"href":1012}," can hold the trader responsible for.",[14,1167,109],{"id":108},[10,1169,112,1170,687,1173,1175],{},[64,1171,1172],{},"median time-weighted return is +3.2%",[64,1174,690],{}," of them are positive on a time-weighted basis.",[10,1177,1178,1179,1185,1186,1188,1189,1192,1193,1195],{},"Two readings follow. First, a majority of published accounts do make money by this measure — the distribution is not the wasteland the internet claims. Second, the middle of that distribution is small: +3.2% against a ",[64,1180,1181,1182,1184],{},"median deepest ",[49,1183,101],{"href":100}," of 9.7%",", so the typical account gave up about three times its eventual return along the way. The same set shows ",[64,1187,123],{}," of accounts having been ",[49,1190,1191],{"href":244},"more than 20% underwater"," at some point, and ",[64,1194,127],{}," more than 50%.",[10,1197,1198,1199,1201,1202,1205,1206,84],{},"The median account here has ",[64,1200,143],{},", drawn from ",[64,1203,1204],{},"15,436,464 synchronised trades"," overall. A large TWR on a short history is ",[49,1207,1208],{"href":82},"a statement about a few weeks, not about a method",[14,1210,159],{"id":158},[10,1212,1213,1215,1216,1218,1219,1221,1222,180,1225,1227],{},[64,1214,1100],{}," is the first and boldest row of the ",[64,1217,210],{}," panel on every published account page, and it is TWR. ",[64,1220,261],{}," sits directly beneath it so the funding-sensitive figure is never far from the funding-neutral one. ",[64,1223,1224],{},"Avg Daily %",[64,1226,228],{},", the next two rows down, are derived from the same time-weighted series.",[10,1229,162,1230,1232,1233,1235,1236,1238,1239,1241,1242,1248],{},[64,1231,165],{}," — one panel that switches views rather than a stack of charts — plots it two ways. ",[64,1234,169],{}," shows daily compounded TWR over the life of the account; ",[64,1237,179],{}," plots the same series against trade number instead of the calendar, which makes frequency visible: two accounts at +40% look identical on a calendar and completely different when one took 90 trades and the other 9,000. The ",[64,1240,173],{}," view shows the raw money, deposits and withdrawals included, which is exactly the picture TWR is designed to correct. The ",[64,1243,1244],{},[49,1245,1247],{"href":1246},"\u002Fguides\u002Fmonthly-returns-table-explained","monthly returns table"," breaks the same time-weighted series into months and years.",[14,1250,233],{"id":232},[58,1252,1253,1259,1269,1275],{},[61,1254,1255,1258],{},[64,1256,1257],{},"\"TWR is how much money I made.\""," It is not a currency figure. An account can show +80% TWR and a small profit if it was traded at a small size for most of its life.",[61,1260,1261,1264,1265,1268],{},[64,1262,1263],{},"\"My deposit lowered my Gain.\""," It cannot. A deposit ends one measurement period and starts another; it contributes no return in either direction. What people usually notice is that the deposit failed to ",[42,1266,1267],{},"raise"," the percentage the way the balance chart did.",[61,1270,1271,1274],{},[64,1272,1273],{},"\"TWR and Abs. Gain should agree.\""," They agree only on an account with a single deposit and no withdrawals. Any divergence is information about funding, not an error.",[61,1276,1277,1280],{},[64,1278,1279],{},"\"It is an annual figure.\""," It is cumulative since the account's first trade, and it is not annualised. A +3.2% over three years and a +3.2% over three months are different results.",[10,1282,1283,1284,84],{},"For worked examples, including how a deposit hides a drawdown, see ",[49,1285,1287],{"href":1286},"\u002Fguides\u002Ftime-weighted-return-explained","time-weighted return explained",{"title":28,"searchDepth":277,"depth":277,"links":1289},[1290,1291,1292,1293,1294],{"id":16,"depth":277,"text":17},{"id":93,"depth":277,"text":94},{"id":108,"depth":277,"text":109},{"id":158,"depth":277,"text":159},{"id":232,"depth":277,"text":233},"Time-weighted return compounds sub-period returns so deposits and withdrawals drop out. The formula, how it differs from Abs. Gain, and public accounts.",{},[1298,293,1085,1299],"what-is-an-equity-curve","what-is-expectancy",{"title":1092,"description":1295},"5.glossary\u002Fwhat-is-time-weighted-return","Time-Weighted Return","xsUg8bgIFRZ18pjGPDUe3u66QKPQWOoj4hi9EmB2Cow",1787415687217]