[{"data":1,"prerenderedAt":1271},["ShallowReactive",2],{"\u002Fglossary\u002Fwhat-is-recovery-factor":3,"\u002Fglossary\u002Fwhat-is-recovery-factor-related":283},{"id":4,"title":5,"body":6,"category":267,"date":268,"description":269,"draft":270,"extension":271,"meta":272,"navigation":270,"path":273,"related":274,"seo":279,"stem":280,"term":281,"updated":268,"__hash__":282},"glossary\u002F5.glossary\u002Fwhat-is-recovery-factor.md","What Is Recovery Factor? Formula, Bands and Real Data",{"type":7,"value":8,"toc":259},"minimark",[9,13,18,29,32,38,41,93,102,106,114,127,131,148,155,166,170,176,197,204,215,219,252],[10,11,12],"p",{},"Recovery factor is net profit divided by maximum drawdown: how much return an account produced for each unit of decline it put its owner through. A value of 2.0 means the account earned twice what it gave up at its worst point. Below 1.0 it has not yet earned back the size of the hole it dug.",[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","Recovery Factor = Net Profit \u002F Maximum Drawdown\n","text",[26,27,23],"code",{"__ignoreMap":28},"",[10,30,31],{},"The formula is trivial; the units are not. Two versions circulate and they do not agree:",[19,33,36],{"className":34,"code":35,"language":24},[22],"Currency form    = Net profit ($) \u002F Maximum drawdown ($)\nPercentage form  = Total return (%) \u002F Maximum drawdown (%)\n",[26,37,35],{"__ignoreMap":28},[10,39,40],{},"Both sides must be measured the same way. Mixing a currency numerator with a percentage denominator produces a figure that looks like a ratio and means nothing.",[42,43,44,57],"table",{},[45,46,47],"thead",{},[48,49,50,54],"tr",{},[51,52,53],"th",{},"Recovery factor",[51,55,56],{},"Reading",[58,59,60,69,77,85],"tbody",{},[48,61,62,66],{},[63,64,65],"td",{},"Below 1.0",[63,67,68],{},"The account has not out-earned its worst decline",[48,70,71,74],{},[63,72,73],{},"1.0 – 2.0",[63,75,76],{},"Working, but the reward is close to the risk absorbed",[48,78,79,82],{},[63,80,81],{},"2.0 – 3.0",[63,83,84],{},"Solid, if the history is long enough to have found the real maximum",[48,86,87,90],{},[63,88,89],{},"Above 3.0",[63,91,92],{},"Strong — check trade count and account age before believing it",[10,94,95,96,101],{},"One caveat outranks the whole table. Recovery factor rises with time on its own: the numerator accumulates as long as the account keeps earning, while the denominator is a historical maximum that only moves when things get worse. ",[97,98,100],"a",{"href":99},"\u002Fguides\u002Fhow-much-history-a-track-record-needs","A five-year account and a six-month account are not comparable here"," — the older one has simply had longer to divide by a fixed number.",[14,103,105],{"id":104},"why-it-matters","Why it matters",[10,107,108,109,113],{},"Profit and drawdown are usually quoted apart, and separately both are easy to present well. Recovery factor refuses to let them be separate. It is the compact form of the question every ",[97,110,112],{"href":111},"\u002Fglossary\u002Fwhat-is-a-track-record","track record"," has to answer: was the pain worth it?",[10,115,116,117,121,122,126],{},"It also fills the gaps left by its neighbours. ",[97,118,120],{"href":119},"\u002Fglossary\u002Fwhat-is-a-profit-factor","Profit factor"," compares gross wins to gross losses and ignores sequence, so an account that made everything in one month scores like one that ground upward every week. The ",[97,123,125],{"href":124},"\u002Fglossary\u002Fwhat-is-the-sharpe-ratio","Sharpe ratio"," measures dispersion but not depth. Recovery factor is the only common metric where the worst moment appears explicitly in the denominator.",[14,128,130],{"id":129},"what-the-data-shows","What the data shows",[10,132,133,134,143,144,147],{},"The figures below describe accounts published on ShowMyTrades, not traders in general. Across the published accounts that have trading history (August 2026), the ",[135,136,137,138,142],"strong",{},"median ",[97,139,141],{"href":140},"\u002Fglossary\u002Fwhat-is-time-weighted-return","time-weighted return"," is +3.2%"," and the ",[135,145,146],{},"median deepest drawdown is 9.7%",".",[10,149,150,151,154],{},"Those medians come from different accounts, so they do not give a population median for the ratio. But an account sitting on both would carry a recovery factor of about ",[135,152,153],{},"0.33"," in the percentage form: roughly one unit of return for every three units of decline endured to get it — worth holding next to the convention that anything under 3.0 is unremarkable.",[10,156,157,158,161,162,165],{},"The tail matters too. ",[135,159,160],{},"38.2%"," of these accounts have been down more than 20%, and ",[135,163,164],{},"63.0%"," are positive over time — so more than a third have a negative numerator. For those the ratio is not low, it is meaningless: dividing a loss by a drawdown produces a number no band interprets.",[14,167,169],{"id":168},"where-you-see-it-on-showmytrades","Where you see it on ShowMyTrades",[10,171,172,175],{},[135,173,174],{},"Recovery factor is not a metric on ShowMyTrades."," No panel, chart or widget displays it under that name or any other, and our statistics engine does not calculate one. You compute it in one step from figures the account page does publish, all derived from the platform feed rather than typed in by the owner.",[10,177,178,179,182,183,186,187,190,191,193,194,196],{},"For the percentage form, take ",[135,180,181],{},"Gain"," from the ",[135,184,185],{},"Account Stats"," panel and divide it by ",[135,188,189],{},"Drawdown",", four rows below it in the same panel. Both are percentages, so the division is valid. Note what each is: ",[135,192,181],{}," is time-weighted return, which strips out deposits and withdrawals, so it cannot be inflated by adding capital to a losing account; ",[135,195,189],{}," is the worst equity decline recorded.",[10,198,199,200,203],{},"For the currency form, ",[135,201,202],{},"Profit"," in the same panel gives net closed profit and loss, after commission and swap, but we do not publish maximum drawdown as a currency figure, so there is no second number to divide by. Use the percentage form, or rebuild the equity path from the closed trade list, which the trades table offers as a CSV download.",[10,205,206,207,209,210,214],{},"Either way, open the ",[135,208,189],{}," chart view beside that panel first. It plots drawdown day by day as bars, showing ",[211,212,213],"em",{},"when"," the maximum was set and how long the account spent below its peak — the duration the ratio cannot express.",[14,216,218],{"id":217},"common-misunderstandings","Common misunderstandings",[220,221,222,229,235,246],"ul",{},[223,224,225,228],"li",{},[135,226,227],{},"\"Higher is always better.\""," Not across different histories. The ratio grows with age at constant risk, so compare only comparable track record lengths.",[223,230,231,234],{},[135,232,233],{},"\"It is the same as profit factor.\""," Profit factor divides gross wins by gross losses. Recovery factor divides the final result by the single worst peak-to-trough decline.",[223,236,237,240,241,245],{},[135,238,239],{},"\"It shows how fast I recover.\""," It shows magnitude, not time — see ",[97,242,244],{"href":243},"\u002Fglossary\u002Fwhat-is-drawdown","drawdown"," for why duration removes more traders than depth.",[223,247,248,251],{},[135,249,250],{},"\"Use DD on Balance for a cleaner denominator.\""," That is the flattering denominator: strategies that never close losers keep balance drawdown small by construction. Prefer the equity figure, and say which you used.",[10,253,254,255,147],{},"For how the denominator is measured, and why the maximum never falls, see the guide to ",[97,256,258],{"href":257},"\u002Fguides\u002Fmaximum-drawdown-explained","maximum drawdown",{"title":28,"searchDepth":260,"depth":260,"links":261},2,[262,263,264,265,266],{"id":16,"depth":260,"text":17},{"id":104,"depth":260,"text":105},{"id":129,"depth":260,"text":130},{"id":168,"depth":260,"text":169},{"id":217,"depth":260,"text":218},"Metrics","2026-08-19T00:00:00.000Z","Recovery factor is net profit divided by maximum drawdown: return earned per unit of decline. Here is the formula, the bands, and where to find the inputs.",true,"md",{},"\u002Fglossary\u002Fwhat-is-recovery-factor",[275,276,277,278],"what-is-maximum-drawdown","what-is-drawdown","what-is-a-profit-factor","what-is-the-sharpe-ratio",{"title":5,"description":269},"5.glossary\u002Fwhat-is-recovery-factor","Recovery Factor","PEuiM5pQPFw3EDZ1EoqyqYWRrmfWCLdpkwGvVfRHmqY",[284,561,760,1070],{"id":285,"title":286,"body":287,"category":267,"date":268,"description":552,"draft":553,"extension":271,"meta":554,"navigation":270,"path":119,"related":555,"seo":558,"stem":559,"term":446,"updated":268,"__hash__":560},"glossary\u002F5.glossary\u002Fwhat-is-a-profit-factor.md","What Is Profit Factor? Formula, Good Values, Real Data",{"type":7,"value":288,"toc":545},[289,292,294,300,303,306,312,315,375,377,380,387,395,397,410,417,422,429,440,442,473,501,503,538],[10,290,291],{},"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.",[14,293,17],{"id":16},[19,295,298],{"className":296,"code":297,"language":24},[22],"Profit Factor = Gross Profit \u002F |Gross Loss|\n",[26,299,297],{"__ignoreMap":28},[10,301,302],{},"Note what the formula ignores: how long the account traded, how much capital it used, and how deep it fell along the way.",[10,304,305],{},"It can also be written in terms of win rate and average trade size, which is where it becomes diagnostic:",[19,307,310],{"className":308,"code":309,"language":24},[22],"Profit Factor = (Win Rate × Avg Win) \u002F ((1 − Win Rate) × Avg Loss)\n",[26,311,309],{"__ignoreMap":28},[10,313,314],{},"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.",[42,316,317,325],{},[45,318,319],{},[48,320,321,323],{},[51,322,120],{},[51,324,56],{},[58,326,327,335,343,351,359,367],{},[48,328,329,332],{},[63,330,331],{},"Below 1.00",[63,333,334],{},"Loses money — structurally, not marginally",[48,336,337,340],{},[63,338,339],{},"1.00 – 1.10",[63,341,342],{},"Inside the noise. One bad week erases it",[48,344,345,348],{},[63,346,347],{},"1.10 – 1.30",[63,349,350],{},"Thin but real edge, if the sample is large",[48,352,353,356],{},[63,354,355],{},"1.30 – 2.00",[63,357,358],{},"A working strategy",[48,360,361,364],{},[63,362,363],{},"2.00 – 3.00",[63,365,366],{},"Strong. Check trade count and cost accounting",[48,368,369,372],{},[63,370,371],{},"Above 3.00",[63,373,374],{},"Rare on long histories: usually a short sample, a few outsized winners, or open losers not yet realised",[14,376,105],{"id":104},[10,378,379],{},"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.",[10,381,382,383,386],{},"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 ",[97,384,258],{"href":385},"\u002Fglossary\u002Fwhat-is-maximum-drawdown",", or you are measuring the destination without the trip.",[10,388,389,390,394],{},"The same caution applies to a profit factor quoted from a ",[97,391,393],{"href":392},"\u002Fglossary\u002Fwhat-is-backtesting","backtest",": optimisers maximise exactly this ratio, so a high backtested value often measures the fitting process rather than the strategy.",[14,396,130],{"id":129},[10,398,133,399,143,402,409],{},[135,400,401],{},"median profit factor is 1.28",[135,403,404,408],{},[97,405,407],{"href":406},"\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.",[10,411,412],{},[413,414],"img",{"alt":415,"src":416},"Medians across public ShowMyTrades accounts: a 68.8% win rate beside a 1.28 profit factor","\u002Fimages\u002Farticles\u002Fwin-rate-vs-payoff.svg",[10,418,419],{},[211,420,421],{},"Two medians from the same set: the win rate looks strong, the edge behind it is thin.",[10,423,424,425,428],{},"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 ",[135,426,427],{},"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.",[10,430,431,432,435,436,439],{},"The median Sharpe ratio on the same set is ",[135,433,434],{},"0.05",", and the median account has ",[135,437,438],{},"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.",[14,441,169],{"id":168},[10,443,444,447,448,451,452,455,456,455,459,455,462,455,465,468,469,472],{},[135,445,446],{},"Profit Factor"," sits in the ",[135,449,450],{},"Advanced Statistics"," module on every published account page, alongside the numbers that explain it: ",[135,453,454],{},"Win Rate",", ",[135,457,458],{},"Avg. Win",[135,460,461],{},"Avg. Loss",[135,463,464],{},"Expectancy",[135,466,467],{},"Total Trades"," and ",[135,470,471],{},"Sharpe Ratio",". The six together say what the single ratio cannot.",[10,474,475,476,479,480,468,483,486,487,468,490,493,494,500],{},"Two product details matter. First, the costs already inside the ratio are itemised separately: the trades table carries ",[135,477,478],{},"Profit (Gross)"," with ",[135,481,482],{},"Swap",[135,484,485],{},"Commission"," as their own columns, and Advanced Statistics totals ",[135,488,489],{},"Total Commissions",[135,491,492],{},"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, ",[97,495,497],{"href":496},"\u002Fguides\u002Fcustom-analysis-and-filter-presets",[135,498,499],{},"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.",[14,502,218],{"id":217},[220,504,505,515,526,532],{},[223,506,507,510,511,147],{},[135,508,509],{},"\"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 ",[97,512,514],{"href":513},"\u002Fglossary\u002Fwhat-is-cost-percentage","once commission and swap are applied",[223,516,517,520,521,525],{},[135,518,519],{},"\"A high profit factor means low risk.\""," It says nothing about drawdown, position size or sequence. A martingale ",[97,522,524],{"href":523},"\u002Fglossary\u002Fwhat-is-position-sizing","position-sizing"," progression can post 4.00 right up to the day it does not.",[223,527,528,531],{},[135,529,530],{},"\"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.",[223,533,534,537],{},[135,535,536],{},"\"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.",[10,539,540,541,147],{},"For which metrics to track over time and in what order, see ",[97,542,544],{"href":543},"\u002Fguides\u002Ftracking-trading-performance","the guide to tracking trading performance",{"title":28,"searchDepth":260,"depth":260,"links":546},[547,548,549,550,551],{"id":16,"depth":260,"text":17},{"id":104,"depth":260,"text":105},{"id":129,"depth":260,"text":130},{"id":168,"depth":260,"text":169},{"id":217,"depth":260,"text":218},"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,{},[276,275,556,557],"what-is-position-sizing","what-is-backtesting",{"title":286,"description":552},"5.glossary\u002Fwhat-is-a-profit-factor","0loLRuqRU0mx9nEOfjdEFW6U1Fb_JAC1jN2JQSkIjuE",{"id":562,"title":563,"body":564,"category":267,"date":268,"description":753,"draft":553,"extension":271,"meta":754,"navigation":270,"path":243,"related":755,"seo":757,"stem":758,"term":189,"updated":268,"__hash__":759},"glossary\u002F5.glossary\u002Fwhat-is-drawdown.md","What Is Drawdown? Definition, Formula and Real Numbers",{"type":7,"value":565,"toc":746},[566,569,571,574,580,583,586,617,619,622,628,633,636,647,649,655,668,671,673,693,708,710,739],[10,567,568],{},"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.",[14,570,17],{"id":16},[10,572,573],{},"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.",[19,575,578],{"className":576,"code":577,"language":24},[22],"Drawdown % = (Peak value − Current value) \u002F Peak value × 100\n",[26,579,577],{"__ignoreMap":28},[10,581,582],{},"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.",[10,584,585],{},"Three distinctions decide what the number actually means:",[220,587,588,598,604],{},[223,589,590,593,594,597],{},[135,591,592],{},"Relative vs absolute."," Relative drawdown is the percentage above. Absolute drawdown, as MetaTrader reports it, is the fall below the ",[211,595,596],{},"initial deposit"," in currency — a completely different figure that can read 0% on an account currently 40% below its peak.",[223,599,600,603],{},[135,601,602],{},"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.",[223,605,606,609,610,612,613,616],{},[135,607,608],{},"Current vs maximum."," Current drawdown is where the account sits today. The historical worst is ",[97,611,258],{"href":385},", and it is the figure most ",[97,614,615],{"href":111},"track records"," quote.",[14,618,105],{"id":104},[10,620,621],{},"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%.",[10,623,624],{},[413,625],{"alt":626,"src":627},"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",[10,629,630],{},[211,631,632],{},"Past 50%, the recovery is a bigger job than the loss that caused it.",[10,634,635],{},"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.",[10,637,638,639,468,642,646],{},"And drawdown is the direct output of ",[97,640,641],{"href":523},"position sizing",[97,643,645],{"href":644},"\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.",[14,648,130],{"id":129},[10,650,651,652,147],{},"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 ",[135,653,654],{},"9.7%",[10,656,657,658,660,661,664,665,667],{},"Set that against what the same accounts earned. The median ",[97,659,141],{"href":140}," is ",[135,662,663],{},"+3.2%",", and ",[135,666,164],{}," 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.",[10,669,670],{},"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.",[14,672,169],{"id":168},[10,674,675,676,678,679,682,683,685,686,692],{},"On every published account page, the ",[135,677,185],{}," panel carries two figures on consecutive rows, immediately below ",[135,680,681],{},"Avg Monthly %",": ",[135,684,189],{},", measured on equity so floating losses on open positions are included, and ",[135,687,688],{},[97,689,691],{"href":690},"\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.",[10,694,695,696,698,699,702,703,707],{},"The charts module has a ",[135,697,189],{}," view that plots daily drawdown as bars over the life of the account. That is where the ",[211,700,701],{},"duration"," of a decline becomes readable instead of inferred, which no single headline percentage can convey. The ",[97,704,706],{"href":705},"\u002Ftools\u002Fdrawdown-calculator","drawdown calculator"," runs the recovery arithmetic on your own balance.",[14,709,218],{"id":217},[220,711,712,718,724,733],{},[223,713,714,717],{},[135,715,716],{},"\"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.",[223,719,720,723],{},[135,721,722],{},"\"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.",[223,725,726,729,730,147],{},[135,727,728],{},"\"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, ",[97,731,732],{"href":99},"a small drawdown is a sample size, not a risk profile",[223,734,735,738],{},[135,736,737],{},"\"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.",[10,740,741,742,147],{},"For how drawdown reads alongside every other number on an account page, see ",[97,743,745],{"href":744},"\u002Fguides\u002Freading-a-trading-account-dashboard","how to read a trading account dashboard",{"title":28,"searchDepth":260,"depth":260,"links":747},[748,749,750,751,752],{"id":16,"depth":260,"text":17},{"id":104,"depth":260,"text":105},{"id":129,"depth":260,"text":130},{"id":168,"depth":260,"text":169},{"id":217,"depth":260,"text":218},"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.",{},[275,556,756,277],"what-is-a-stop-loss",{"title":563,"description":753},"5.glossary\u002Fwhat-is-drawdown","DMQq_wxULyvtTewFH3EendlyxckASOfp4LLweDXbTKY",{"id":761,"title":762,"body":763,"category":267,"date":268,"description":1062,"draft":553,"extension":271,"meta":1063,"navigation":270,"path":385,"related":1064,"seo":1066,"stem":1067,"term":1068,"updated":268,"__hash__":1069},"glossary\u002F5.glossary\u002Fwhat-is-maximum-drawdown.md","What Is Maximum Drawdown? Formula and Recovery Maths",{"type":7,"value":764,"toc":1055},[765,772,774,777,783,786,836,842,859,861,864,926,929,936,938,944,950,955,966,993,995,1009,1022,1024,1050],[10,766,767,768,771],{},"Maximum drawdown is the largest ",[97,769,770],{"href":243},"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.",[42,787,788,804],{},[45,789,790],{},[48,791,792,795,798,801],{},[51,793,794],{},"Metric",[51,796,797],{},"Measured on",[51,799,800],{},"Open positions counted?",[51,802,803],{},"What it tells you",[58,805,806,821],{},[48,807,808,812,815,818],{},[63,809,810],{},[135,811,189],{},[63,813,814],{},"Equity (balance + floating P&L)",[63,816,817],{},"Yes",[63,819,820],{},"The real fall in what the account was worth at that moment",[48,822,823,827,830,833],{},[63,824,825],{},[135,826,691],{},[63,828,829],{},"Closed balance only",[63,831,832],{},"No",[63,834,835],{},"The fall in realised results",[10,837,838,841],{},[97,839,840],{"href":690},"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.",[10,843,844,845,468,848,851,852,855,856,858],{},"So an account showing ",[135,846,847],{},"Drawdown 41%",[135,849,850],{},"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 ",[211,853,854],{},"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 ",[97,857,645],{"href":644}," is for.",[14,860,105],{"id":104},[10,862,863],{},"Recovery is asymmetric, because the gain has to compound off a smaller base than the loss did.",[42,865,866,876],{},[45,867,868],{},[48,869,870,873],{},[51,871,872],{},"Maximum drawdown",[51,874,875],{},"Gain needed to reach the old peak",[58,877,878,886,894,902,910,918],{},[48,879,880,883],{},[63,881,882],{},"10%",[63,884,885],{},"11.1%",[48,887,888,891],{},[63,889,890],{},"20%",[63,892,893],{},"25.0%",[48,895,896,899],{},[63,897,898],{},"30%",[63,900,901],{},"42.9%",[48,903,904,907],{},[63,905,906],{},"50%",[63,908,909],{},"100.0%",[48,911,912,915],{},[63,913,914],{},"70%",[63,916,917],{},"233.3%",[48,919,920,923],{},[63,921,922],{},"90%",[63,924,925],{},"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 ",[97,933,934],{"href":523},"position size"," implies a 60% drawdown you have no evidence you can sit through.",[14,937,130],{"id":129},[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 ",[135,942,654],{},", and the spread around that median is wide in both directions.",[10,945,946],{},[413,947],{"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],{},[211,953,954],{},"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, ",[135,959,960],{},"17.6% have fallen more than 50%"," below their peak and ",[135,963,964],{},"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.",[10,967,968,969,972,973,975,976,980,981,984,985,988,989,147],{},"The near end deserves the same scepticism: ",[135,970,971],{},"38.5%"," record a maximum drawdown under 5%. Some of those are genuinely conservative. Many are simply young. The median published account holds ",[135,974,438],{}," at a ",[97,977,979],{"href":978},"\u002Fglossary\u002Fwhat-is-average-trade-length","median trade length"," of ",[135,982,983],{},"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 ",[97,986,987],{"href":99},"tails need history behind them"," — which is why the figure is only worth much on a ",[97,990,992],{"href":991},"\u002Fglossary\u002Fwhat-is-a-verified-track-record","verified track record",[14,994,169],{"id":168},[10,996,997,998,1000,1001,468,1003,1005,1006,1008],{},"The ",[135,999,185],{}," panel on every published account page shows ",[135,1002,189],{},[135,1004,691],{}," on consecutive rows below ",[135,1007,681],{},", both derived from the broker feed rather than self-reported. Compare them first; the divergence is the fastest read on the page.",[10,1010,1011,1012,1014,1015,1018,1019,1021],{},"The charts module includes a dedicated ",[135,1013,189],{}," view, which plots daily drawdown as bars and so answers the question the headline percentage cannot: how ",[211,1016,1017],{},"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 ",[97,1020,706],{"href":705}," runs the recovery table above against your own balance.",[14,1023,218],{"id":217},[220,1025,1026,1032,1038,1044],{},[223,1027,1028,1031],{},[135,1029,1030],{},"\"My maximum drawdown improved this year.\""," It cannot improve. It is a historical maximum, and a good year cannot un-print it.",[223,1033,1034,1037],{},[135,1035,1036],{},"\"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.",[223,1039,1040,1043],{},[135,1041,1042],{},"\"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.",[223,1045,1046,1049],{},[135,1047,1048],{},"\"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.",[10,1051,1052,1053,147],{},"For maximum drawdown in context with every other metric on a live account page, read ",[97,1054,745],{"href":744},{"title":28,"searchDepth":260,"depth":260,"links":1056},[1057,1058,1059,1060,1061],{"id":16,"depth":260,"text":17},{"id":104,"depth":260,"text":105},{"id":129,"depth":260,"text":130},{"id":168,"depth":260,"text":169},{"id":217,"depth":260,"text":218},"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.",{},[276,556,1065,277],"what-is-a-verified-track-record",{"title":762,"description":1062},"5.glossary\u002Fwhat-is-maximum-drawdown","Maximum Drawdown","ApNMddCmg0QCLnuOwuyL_buXf8nvEi3z-WICzHc5jDU",{"id":1071,"title":1072,"body":1073,"category":267,"date":268,"description":1262,"draft":270,"extension":271,"meta":1263,"navigation":270,"path":124,"related":1264,"seo":1268,"stem":1269,"term":471,"updated":268,"__hash__":1270},"glossary\u002F5.glossary\u002Fwhat-is-the-sharpe-ratio.md","What Is the Sharpe Ratio? Formula, Limits and Real Data",{"type":7,"value":1074,"toc":1255},[1075,1078,1080,1083,1089,1092,1098,1106,1109,1111,1114,1120,1128,1130,1145,1155,1158,1160,1194,1197,1218,1220,1249],[10,1076,1077],{},"The Sharpe ratio is average return divided by the standard deviation of those returns: how much return an account produced per unit of volatility. Two accounts that finish a year at the same gain can carry very different Sharpe ratios, and the higher one got there on a smoother path.",[14,1079,17],{"id":16},[10,1081,1082],{},"The textbook definition uses periodic returns and subtracts a risk-free rate:",[19,1084,1087],{"className":1085,"code":1086,"language":24},[22],"Sharpe Ratio = (Mean return − Risk-free rate) \u002F Standard deviation of returns\n",[26,1088,1086],{"__ignoreMap":28},[10,1090,1091],{},"ShowMyTrades computes it on closed trades rather than on calendar periods, and does not subtract a risk-free rate:",[19,1093,1096],{"className":1094,"code":1095,"language":24},[22],"Sharpe Ratio = Mean per-trade result \u002F Standard deviation of per-trade results\n",[26,1097,1095],{"__ignoreMap":28},[10,1099,1100,1101,1105],{},"Each trade enters the series as profit + commission + swap, so the inputs are already net of costs. Only closed buy and sell trades count: deposits, withdrawals and balance operations are filtered out before the series is built. The denominator is the population standard deviation of that same series — squared distances divided by the number of trades, not by that number minus one — which is why ",[97,1102,1104],{"href":1103},"\u002Fglossary\u002Fwhat-is-standard-deviation-in-trading","standard deviation"," sits immediately above the ratio in our statistics table: it is literally the divisor. An account with fewer than two closed trades reads 0.00.",[10,1107,1108],{},"Measuring per trade rather than per month means the figure is not annualised, so the usual conventions do not transfer. \"Above 1.0 is good, above 2.0 is excellent\" describes an annualised Sharpe on periodic returns. On a per-trade series, 1.00 would mean the average trade is worth a full standard deviation of trade outcomes — almost no account with a meaningful trade count reaches it.",[14,1110,105],{"id":104},[10,1112,1113],{},"Gain alone says where an account ended. Sharpe says something about how it travelled. A strategy with a small, dependable edge repeated often will show a modest but positive ratio; a strategy carried by two lucky trades will show a large mean sitting on an even larger dispersion, and the ratio collapses.",[10,1115,1116,1117,147],{},"It is also the honest counter to a chart that merely looks smooth, built from the same closed trades that produce ",[97,1118,1119],{"href":119},"profit factor",[10,1121,1122,1123,1127],{},"What it cannot do is distinguish good volatility from bad. A trade that overshoots to the upside raises the denominator exactly as much as one that overshoots to the downside. That objection is the reason the ",[97,1124,1126],{"href":1125},"\u002Fglossary\u002Fwhat-is-the-sortino-ratio","Sortino ratio"," exists.",[14,1129,130],{"id":129},[10,1131,133,1132,1135,1136,1139,1140,147],{},[135,1133,1134],{},"median Sharpe ratio is 0.05",", on a ",[135,1137,1138],{},"median of 171 closed trades"," and a ",[135,1141,1142,1144],{},[97,1143,979],{"href":978}," of 2.4 hours",[10,1146,1147,1148,660,1150,468,1152,1154],{},"Read through our own formula, 0.05 says something concrete: on the median account the average trade is worth about one twentieth of a standard deviation of trade results. Roughly twenty parts noise to one part signal. That is not a failing set of accounts — the median ",[97,1149,141],{"href":140},[135,1151,663],{},[135,1153,164],{}," of them are positive over time. It is what a real edge looks like at the level of a single trade.",[10,1156,1157],{},"It also explains why short samples prove nothing. At that signal-to-noise ratio, a run of twenty green trades is an ordinary outcome for an account with no edge at all, and a week of red says nothing about an account that has one.",[14,1159,169],{"id":168},[10,1161,1162,1164,1165,1167,1168,1171,1172,1175,1176,455,1178,455,1181,455,1183,468,1186,1189,1190,147],{},[135,1163,471],{}," is the exact label, in the ",[135,1166,450],{}," module of the account page, inside the ",[211,1169,1170],{},"Performance Metrics"," column and carrying a tooltip. It sits directly under ",[135,1173,1174],{},"Standard Deviation"," — its own denominator — and beside ",[135,1177,446],{},[135,1179,1180],{},"Z-Score (Probability)",[135,1182,464],{},[135,1184,1185],{},"AHPR",[135,1187,1188],{},"GHPR",". It is calculated on our servers from the stored closed trades, printed to two decimals, and coloured green from 1.00 up, yellow from 0 to 1, red below zero. The module is shown by default on published account pages, though the owner can hide it, and it is not part of the ",[97,1191,1193],{"href":1192},"\u002Fguides\u002Ftrading-widgets-and-embeds","embeddable widgets",[10,1195,1196],{},"One warning about our own page: the tooltip on that label still quotes the conventional bands, above 1.0 good and above 2.0 excellent. Those bands belong to an annualised Sharpe on periodic returns, not to the per-trade figure printed beside them.",[10,1198,1199,1200,455,1203,455,1206,468,1209,1212,1213,1217],{},"The same module offers ",[135,1201,1202],{},"Table",[135,1204,1205],{},"Weekday",[135,1207,1208],{},"Hourly",[135,1210,1211],{},"Duration"," views, and ",[135,1214,1215],{},[97,1216,499],{"href":496}," recomputes the whole block on a filtered subset — Date Range, Symbols, Magic Numbers, Trade Type, Trading Hours, Lot Size and more. Recomputing Sharpe without an account's best symbol shows whether the ratio describes a system or an episode.",[14,1219,218],{"id":217},[220,1221,1222,1228,1237,1243],{},[223,1223,1224,1227],{},[135,1225,1226],{},"\"Above 1.0 is good.\""," True of an annualised Sharpe on periodic returns. Ours is per trade, so the threshold does not apply.",[223,1229,1230,1233,1234,1236],{},[135,1231,1232],{},"\"Sharpe measures risk.\""," It measures dispersion of closed trade results. It knows nothing about how deep the account fell — that is ",[97,1235,244],{"href":243},", reported separately.",[223,1238,1239,1242],{},[135,1240,1241],{},"\"A high Sharpe means a safe account.\""," Grid and averaging systems post tight, uniform closed trades precisely because they refuse to realise losers. Floating losses never enter the series.",[223,1244,1245,1248],{},[135,1246,1247],{},"\"I can compare my Sharpe with any account.\""," Only at comparable trade frequency and holding period: a scalper closing 200 trades a month and a swing trader closing 8 are measured in different units.",[10,1250,1251,1252,147],{},"For how Sharpe reads next to every other number on an account page, see the guide to ",[97,1253,1254],{"href":744},"reading a trading account dashboard",{"title":28,"searchDepth":260,"depth":260,"links":1256},[1257,1258,1259,1260,1261],{"id":16,"depth":260,"text":17},{"id":104,"depth":260,"text":105},{"id":129,"depth":260,"text":130},{"id":168,"depth":260,"text":169},{"id":217,"depth":260,"text":218},"The Sharpe ratio is average return divided by the volatility of those returns. Here is the formula, how we compute it per trade, and why our median is 0.05.",{},[1265,1266,1267,277],"what-is-standard-deviation-in-trading","what-is-the-sortino-ratio","what-is-recovery-factor",{"title":1072,"description":1262},"5.glossary\u002Fwhat-is-the-sharpe-ratio","ba1NCAQnPXiXHA3mQUH2kyWz1dokcPnUnzXgxtvFftA",1787415689960]