[{"data":1,"prerenderedAt":1243},["ShallowReactive",2],{"\u002Fglossary\u002Fwhat-is-volatility":3,"\u002Fglossary\u002Fwhat-is-volatility-related":263},{"id":4,"title":5,"body":6,"category":247,"date":248,"description":249,"draft":250,"extension":251,"meta":252,"navigation":250,"path":253,"related":254,"seo":259,"stem":260,"term":261,"updated":248,"__hash__":262},"glossary\u002F5.glossary\u002Fwhat-is-volatility.md","What Is Volatility? How It Is Measured in Trading",{"type":7,"value":8,"toc":239},"minimark",[9,13,18,21,32,35,43,47,56,64,67,71,78,97,112,116,146,167,191,195,232],[10,11,12],"p",{},"Volatility is the dispersion of returns around their own average — how far individual results scatter from the mean, not which direction they point. It is measured with standard deviation, and it is symmetrical: a strategy that occasionally gains 8% in a day is exactly as volatile as one that occasionally loses 8%. Volatility is therefore not risk. It is the multiplier that turns a given position size into a given amount of risk.",[14,15,17],"h2",{"id":16},"how-it-works","How it works",[10,19,20],{},"Take the series of returns — per day, per month, or per trade — find the mean, and measure the typical distance from it.",[22,23,28],"pre",{"className":24,"code":26,"language":27},[25],"language-text","σ = √( Σ (rᵢ − r̄)² \u002F (n − 1) )\n\nrᵢ = return of period i\nr̄  = mean return across all n periods\nn  = number of periods\n","text",[29,30,26],"code",{"__ignoreMap":31},"",[10,33,34],{},"Standard deviation comes out in the same units as the inputs: percent if you fed it percentages, account currency if you fed it per-trade profit and loss. To compare across timeframes it is scaled by the square root of time, which is why an annualised figure from daily data is multiplied by √252, the number of trading days in a year.",[10,36,37,38,42],{},"Two properties matter in practice. Volatility is ",[39,40,41],"strong",{},"not constant"," — it clusters, so quiet weeks are followed by quiet weeks and violent days arrive in groups. And it is the denominator of every risk-adjusted metric: the Sharpe ratio family divides return by exactly this number, which is how two strategies with the same gain end up rated very differently.",[14,44,46],{"id":45},"why-it-matters","Why it matters",[10,48,49,50,55],{},"Position size is meaningless without it. One lot of a pair moving 40 pips a day and one lot of a pair moving 140 pips a day are two completely different bets wearing the same label. Sizing by lots rather than by expected movement is the single most common way an account's risk profile drifts without the trader deciding anything, and it is why ",[51,52,54],"a",{"href":53},"\u002Fglossary\u002Fwhat-is-position-sizing","position sizing"," rules are written in currency risked rather than in lots.",[10,57,58,59,63],{},"Volatility is also what converts into ",[51,60,62],{"href":61},"\u002Fglossary\u002Fwhat-is-drawdown","drawdown",". Depth of decline is roughly volatility multiplied by exposure multiplied by time spent wrong. Halve the volatility of the instruments you trade and, at constant size, you halve the drawdown you have to survive — and the return along with it.",[10,65,66],{},"Finally, it changes underneath you. A strategy sized correctly in a calm quarter is oversized when volatility doubles, and it does not need to make a single new decision to become dangerous. Stops widen, spreads widen, and the same lot size now risks twice what it was authorised to risk.",[14,68,70],{"id":69},"what-the-data-shows","What the data shows",[10,72,73,74,77],{},"Across the public accounts on ShowMyTrades with trading history (August 2026), the median ",[39,75,76],{},"Sharpe Ratio is 0.05",". That is a return barely distinguishable from the noise around it: the middle account's average result per period is tiny compared with the dispersion of those periods.",[10,79,80,81,84,85,88,89,92,93,96],{},"The rest of the distribution reads the same way: median time-weighted return ",[39,82,83],{},"+3.2%",", median deepest drawdown ",[39,86,87],{},"9.7%",", ",[39,90,91],{},"171 closed trades"," at a median length of ",[39,94,95],{},"2.4 hours",". Small edge, risk absorbed several times larger than the result produced.",[10,98,99,100,103,104,107,108,111],{},"Dispersion also explains the gap between how often these accounts win and what they end up with. The median win rate is ",[39,101,102],{},"68.8%"," and the median profit factor ",[39,105,106],{},"1.28",": most trades close green, and the minority that do not are large enough to consume most of the gain. ",[39,109,110],{},"63.0%"," of accounts are positive over time — a majority, by a margin much thinner than the scatter of the results behind it.",[14,113,115],{"id":114},"where-you-see-it-on-showmytrades","Where you see it on ShowMyTrades",[10,117,118,119,122,123,127,128,134,135,138,139,145],{},"In ",[39,120,121],{},"Advanced Statistics",", the ",[124,125,126],"em",{},"Performance Metrics"," section shows ",[39,129,130],{},[51,131,133],{"href":132},"\u002Fglossary\u002Fwhat-is-standard-deviation-in-trading","Standard Deviation"," and ",[39,136,137],{},"Sharpe Ratio"," one under the other. Standard Deviation there is printed in the account currency and measures the spread of individual trade results: a large figure next to a small ",[39,140,141],{},[51,142,144],{"href":143},"\u002Fglossary\u002Fwhat-is-expectancy","Expectancy"," is a strategy whose outcome depends heavily on which trades happen to land in the sample.",[10,147,148,149,152,153,134,156,159,160,166],{},"The ",[39,150,151],{},"Account Stats"," panel carries ",[39,154,155],{},"Avg Daily %",[39,157,158],{},"Avg Monthly %"," on the two rows below Gain and Abs. Gain. Those are averages, so read them against the ",[39,161,162],{},[51,163,165],{"href":164},"\u002Fguides\u002Fmonthly-returns-table-explained","Monthly Returns"," table, where the month-to-month scatter is visible directly: two accounts with the same average monthly percentage can have wildly different rows.",[10,168,148,169,172,173,176,177,180,181,183,184,134,187,190],{},[39,170,171],{},"charts viewer"," is one panel that switches views: ",[124,174,175],{},"Growth by Trade"," makes clustering obvious, ",[124,178,179],{},"Drawdown"," shows what the dispersion cost. ",[39,182,121],{}," adds ",[124,185,186],{},"Weekday",[124,188,189],{},"Hourly"," views, which show when results concentrate — usually when volatility does.",[14,192,194],{"id":193},"common-misunderstandings","Common misunderstandings",[196,197,198,205,211,217],"ul",{},[199,200,201,204],"li",{},[39,202,203],{},"\"Volatility is risk.\""," Risk is the chance of a loss you cannot survive. Volatility is dispersion in both directions and says nothing about your capital base.",[199,206,207,210],{},[39,208,209],{},"\"Low volatility means safe.\""," Strategies that sell tails — grids, martingales, unhedged carry — read as low volatility right up to the event they were built to lose to.",[199,212,213,216],{},[39,214,215],{},"\"High Sharpe means a better trader.\""," It means better return per unit of dispersion, over the sample measured. With 171 trades the estimate is noisy.",[199,218,219,222,223,226,227,231],{},[39,220,221],{},"\"Volatility is a property of the instrument.\""," It is a property of the instrument ",[124,224,225],{},"and"," the period. The same pair changes regime several times a year, and pairs that share a currency change together — see ",[51,228,230],{"href":229},"\u002Fglossary\u002Fwhat-is-forex-pair-correlation","forex pair correlation",".",[10,233,234,235,231],{},"Volatility only matters once it becomes a real loss, and how that reads is covered in ",[51,236,238],{"href":237},"\u002Fguides\u002Fmaximum-drawdown-explained","maximum drawdown explained",{"title":31,"searchDepth":240,"depth":240,"links":241},2,[242,243,244,245,246],{"id":16,"depth":240,"text":17},{"id":45,"depth":240,"text":46},{"id":69,"depth":240,"text":70},{"id":114,"depth":240,"text":115},{"id":193,"depth":240,"text":194},"Metrics","2026-08-19T00:00:00.000Z","Volatility is the dispersion of returns around their average, measured with standard deviation. It is not risk by itself, but it decides what a lot size means.",true,"md",{},"\u002Fglossary\u002Fwhat-is-volatility",[255,256,257,258],"what-is-drawdown","what-is-position-sizing","what-is-maximum-drawdown","what-is-forex-pair-correlation",{"title":5,"description":249},"5.glossary\u002Fwhat-is-volatility","Volatility","Bayb0Tk2swP7kUxrPVVIleTDEsNs63g6l6-gKxo5cjE",[264,468,724,1038],{"id":265,"title":266,"body":267,"category":247,"date":248,"description":459,"draft":460,"extension":251,"meta":461,"navigation":250,"path":61,"related":462,"seo":465,"stem":466,"term":179,"updated":248,"__hash__":467},"glossary\u002F5.glossary\u002Fwhat-is-drawdown.md","What Is Drawdown? Definition, Formula and Real Numbers",{"type":7,"value":268,"toc":452},[269,272,274,277,283,286,289,323,325,328,335,340,343,353,355,360,374,377,379,398,413,415,445],[10,270,271],{},"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.",[14,273,17],{"id":16},[10,275,276],{},"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.",[22,278,281],{"className":279,"code":280,"language":27},[25],"Drawdown % = (Peak value − Current value) \u002F Peak value × 100\n",[29,282,280],{"__ignoreMap":31},[10,284,285],{},"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.",[10,287,288],{},"Three distinctions decide what the number actually means:",[196,290,291,301,307],{},[199,292,293,296,297,300],{},[39,294,295],{},"Relative vs absolute."," Relative drawdown is the percentage above. Absolute drawdown, as MetaTrader reports it, is the fall below the ",[124,298,299],{},"initial deposit"," in currency — a completely different figure that can read 0% on an account currently 40% below its peak.",[199,302,303,306],{},[39,304,305],{},"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.",[199,308,309,312,313,317,318,322],{},[39,310,311],{},"Current vs maximum."," Current drawdown is where the account sits today. The historical worst is ",[51,314,316],{"href":315},"\u002Fglossary\u002Fwhat-is-maximum-drawdown","maximum drawdown",", and it is the figure most ",[51,319,321],{"href":320},"\u002Fglossary\u002Fwhat-is-a-track-record","track records"," quote.",[14,324,46],{"id":45},[10,326,327],{},"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%.",[10,329,330],{},[331,332],"img",{"alt":333,"src":334},"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",[10,336,337],{},[124,338,339],{},"Past 50%, the recovery is a bigger job than the loss that caused it.",[10,341,342],{},"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.",[10,344,345,346,134,348,352],{},"And drawdown is the direct output of ",[51,347,54],{"href":53},[51,349,351],{"href":350},"\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.",[14,354,70],{"id":69},[10,356,357,358,231],{},"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 ",[39,359,87],{},[10,361,362,363,367,368,370,371,373],{},"Set that against what the same accounts earned. The median ",[51,364,366],{"href":365},"\u002Fglossary\u002Fwhat-is-time-weighted-return","time-weighted return"," is ",[39,369,83],{},", and ",[39,372,110],{}," 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.",[10,375,376],{},"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.",[14,378,115],{"id":114},[10,380,381,382,384,385,387,388,390,391,397],{},"On every published account page, the ",[39,383,151],{}," panel carries two figures on consecutive rows, immediately below ",[39,386,158],{},": ",[39,389,179],{},", measured on equity so floating losses on open positions are included, and ",[39,392,393],{},[51,394,396],{"href":395},"\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.",[10,399,400,401,403,404,407,408,412],{},"The charts module has a ",[39,402,179],{}," view that plots daily drawdown as bars over the life of the account. That is where the ",[124,405,406],{},"duration"," of a decline becomes readable instead of inferred, which no single headline percentage can convey. The ",[51,409,411],{"href":410},"\u002Ftools\u002Fdrawdown-calculator","drawdown calculator"," runs the recovery arithmetic on your own balance.",[14,414,194],{"id":193},[196,416,417,423,429,439],{},[199,418,419,422],{},[39,420,421],{},"\"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.",[199,424,425,428],{},[39,426,427],{},"\"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.",[199,430,431,434,435,231],{},[39,432,433],{},"\"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, ",[51,436,438],{"href":437},"\u002Fguides\u002Fhow-much-history-a-track-record-needs","a small drawdown is a sample size, not a risk profile",[199,440,441,444],{},[39,442,443],{},"\"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.",[10,446,447,448,231],{},"For how drawdown reads alongside every other number on an account page, see ",[51,449,451],{"href":450},"\u002Fguides\u002Freading-a-trading-account-dashboard","how to read a trading account dashboard",{"title":31,"searchDepth":240,"depth":240,"links":453},[454,455,456,457,458],{"id":16,"depth":240,"text":17},{"id":45,"depth":240,"text":46},{"id":69,"depth":240,"text":70},{"id":114,"depth":240,"text":115},{"id":193,"depth":240,"text":194},"Drawdown is the peak-to-trough fall in an account's value, in percent. Here is the formula, why it is cumulative, and what thousands of real trading accounts show.",false,{},[257,256,463,464],"what-is-a-stop-loss","what-is-a-profit-factor",{"title":266,"description":459},"5.glossary\u002Fwhat-is-drawdown","DMQq_wxULyvtTewFH3EendlyxckASOfp4LLweDXbTKY",{"id":469,"title":470,"body":471,"category":713,"date":248,"description":714,"draft":250,"extension":251,"meta":715,"navigation":250,"path":229,"related":716,"seo":720,"stem":721,"term":722,"updated":248,"__hash__":723},"glossary\u002F5.glossary\u002Fwhat-is-forex-pair-correlation.md","What Is Forex Pair Correlation? Hidden Concentration",{"type":7,"value":472,"toc":706},[473,481,483,486,492,500,511,513,516,522,525,535,537,547,564,577,579,625,635,664,666,699],[10,474,475,476,480],{},"Forex pair correlation is the degree to which two currency pairs move together, expressed as a coefficient between −1 and +1. It exists because every pair is a ratio of two currencies, so any two pairs sharing a currency are partly the same bet. A trader holding ",[51,477,479],{"href":478},"\u002Fglossary\u002Fwhat-is-correlation-risk","three correlated positions"," is not diversified across three trades — they hold one larger position, sized by accident rather than by decision.",[14,482,17],{"id":16},[10,484,485],{},"The coefficient is the covariance of two return series divided by the product of their standard deviations.",[22,487,490],{"className":488,"code":489,"language":27},[25],"ρ = cov(A, B) \u002F (σA × σB)\n\nρ = +1.0        identical movement\nρ =  0.0        unrelated\nρ = −1.0        exactly opposite\n|ρ| > 0.7       treat the two as one position for sizing\n",[29,491,489],{"__ignoreMap":31},[10,493,494,495,499],{},"The mechanism is arithmetic, not sentiment. Long EUR\u002FUSD, long GBP\u002FUSD and long AUD\u002FUSD are three ways of being short the dollar; when the dollar strengthens, all three lose at once. Long EUR\u002FUSD, long EUR\u002FGBP and long EUR\u002FJPY are three ways of being long the euro. And a pair can be inversely correlated by construction: EUR\u002FUSD and USD\u002FCHF have the dollar on opposite sides, so long one and long the other is close to holding nothing at all while paying ",[51,496,498],{"href":497},"\u002Fglossary\u002Fwhat-is-a-spread","spread"," on both.",[10,501,502,503,506,507,510],{},"Two properties make it dangerous. Correlation is ",[39,504,505],{},"unstable"," — a coefficient measured over the last month is not a fact about the pairs, it is an observation about the last month. And it ",[39,508,509],{},"rises in stress",": exactly when diversification is supposed to help, correlations converge towards 1 as flows move into and out of the dollar wholesale.",[14,512,46],{"id":45},[10,514,515],{},"Risk from correlated positions multiplies rather than adds. Combined exposure follows the same rule as any two-asset portfolio.",[22,517,520],{"className":518,"code":519,"language":27},[25],"σ_total = √( σA² + σB² + 2 × ρ × σA × σB )\n",[29,521,519],{"__ignoreMap":31},[10,523,524],{},"At ρ = 0, two 1% positions combine to about 1.4% of exposure. At ρ = 0.9, they combine to about 1.95% — nearly the full sum. Three such trades, each within a sensible per-trade risk limit, breach the account limit together while every individual rule was respected.",[10,526,527,528,530,531,534],{},"This is how accounts with disciplined ",[51,529,54],{"href":53}," still produce large drawdowns. Nothing in the rulebook was broken. It counted positions instead of exposure, and the ",[51,532,533],{"href":253},"volatility"," of the combined book was two or three times what the trader believed.",[14,536,70],{"id":69},[10,538,539,540,543,544,546],{},"Across the public accounts on ShowMyTrades with trading history (August 2026), ",[39,541,542],{},"1,724,575 lots"," have been traded, and the median account holds ",[39,545,91],{}," — enough for concentration to be visible on the symbol breakdown, and enough for a single correlated cluster to dominate the record.",[10,548,549,550,367,553,555,556,559,560,563],{},"The drawdown distribution is where undeclared concentration shows up. ",[51,551,552],{"href":315},"Median deepest drawdown",[39,554,87],{},", but ",[39,557,558],{},"38.2%"," of accounts have fallen more than 20% from a peak and ",[39,561,562],{},"17.6%"," have lost over half their peak value. Losses of that size on an account trading small individual sizes usually mean many positions moved as one.",[10,565,566,567,134,570,370,573,576],{},"Offsetting the exposure instead of closing it has a running cost, and it shows up in the totals. These accounts have paid ",[39,568,569],{},"$4,782,670 in commissions",[39,571,572],{},"$862,547 in swap",[39,574,575],{},"86.3%"," of the accounts that hold positions overnight pay net negative swap. Two pairs held against each other keep that meter running while cancelling much of the risk they were opened for.",[14,578,115],{"id":114},[10,580,148,581,584,585,588,589,88,592,134,595,598,599,88,602,605,606,609,610,613,614,617,618,134,621,624],{},[39,582,583],{},"Breakdown Statistics"," module is the concentration check. Its ",[124,586,587],{},"By Symbol"," tab lists every instrument the account traded with ",[39,590,591],{},"Longs",[39,593,594],{},"Shorts",[39,596,597],{},"Total"," columns, each carrying ",[39,600,601],{},"Trades",[39,603,604],{},"Pips"," and profit, plus ",[39,607,608],{},"Won(%)",". Read the ",[39,611,612],{},"Currency"," column first: several rows sharing USD, all on the same side, is a single dollar position spread across tickers. The ",[124,615,616],{},"Chart"," view plots ",[124,619,620],{},"Trades by Currency Pair",[124,622,623],{},"Profit by Currency Pair",", so concentration in the largest few instruments is visible without reading the table.",[10,626,148,627,634],{},[51,628,630,633],{"href":629},"\u002Fguides\u002Fmagic-numbers-and-strategy-labels",[124,631,632],{},"By Magic Number"," tab"," does the same for strategies, showing whether one Expert Advisor produced every correlated row or several are colliding on the same currency.",[10,636,637,638,641,642,645,646,649,650,653,654,657,658,660,661,663],{},"In the ",[39,639,640],{},"trades table",", read the ",[39,643,644],{},"Open Time"," column and look for clusters: several tickets opened within the same minute on different symbols is a correlated entry, not a diversified one. The ",[39,647,648],{},"Custom Analysis"," slideover filters by symbols, magic numbers and ",[39,651,652],{},"Buy (Long)"," \u002F ",[39,655,656],{},"Sell (Short)",", so you can recompute the statistics with one currency group excluded and see how much of the record depended on it. The ",[39,659,171],{}," ",[124,662,179],{}," view then shows the effect: correlated books fall in one step rather than in several.",[14,665,194],{"id":193},[196,667,668,674,683,693],{},[199,669,670,673],{},[39,671,672],{},"\"A pair is one instrument.\""," It is two currencies. EUR\u002FUSD is a euro position and a dollar position at once, which is why it moves with everything else quoting either.",[199,675,676,679,680,682],{},[39,677,678],{},"\"The coefficient tells me how much to size.\""," It says how two positions move together, not how far. Sizing needs correlation and ",[51,681,533],{"href":253}," together: a tight correlation between two quiet instruments is a small problem.",[199,684,685,688,689,692],{},[39,686,687],{},"\"Correlation is one number per pair.\""," It is one number per pair ",[124,690,691],{},"per window",": two instruments can look unrelated hour to hour and move as one week to week.",[199,694,695,698],{},[39,696,697],{},"\"It only applies to forex majors.\""," Gold, indices and crypto pairs quoted against the dollar belong to the same cluster as EUR\u002FUSD more often than traders expect.",[10,700,701,702,231],{},"For reading concentration through volume rather than through profit, see ",[51,703,705],{"href":704},"\u002Fguides\u002Ftrading-volume-analysis","trading volume analysis",{"title":31,"searchDepth":240,"depth":240,"links":707},[708,709,710,711,712],{"id":16,"depth":240,"text":17},{"id":45,"depth":240,"text":46},{"id":69,"depth":240,"text":70},{"id":114,"depth":240,"text":115},{"id":193,"depth":240,"text":194},"Strategy","Currency pairs that share a currency move together. Correlation measures how tightly, and it is what turns three separate-looking trades into one position.",{},[717,718,256,719],"what-is-correlation-risk","what-is-volatility","what-is-leverage",{"title":470,"description":714},"5.glossary\u002Fwhat-is-forex-pair-correlation","Forex Pair Correlation","DjTTfH0Fxqi8uUIDqE9m2BfJJBAgW-YXUr2gcejQcgo",{"id":725,"title":726,"body":727,"category":247,"date":248,"description":1030,"draft":460,"extension":251,"meta":1031,"navigation":250,"path":315,"related":1032,"seo":1034,"stem":1035,"term":1036,"updated":248,"__hash__":1037},"glossary\u002F5.glossary\u002Fwhat-is-maximum-drawdown.md","What Is Maximum Drawdown? Formula and Recovery Maths",{"type":7,"value":728,"toc":1023},[729,736,738,741,747,750,806,812,829,831,834,896,899,906,908,914,920,925,936,962,964,977,990,992,1018],[10,730,731,732,735],{},"Maximum drawdown is the largest ",[51,733,734],{"href":61},"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.",[14,737,17],{"id":16},[10,739,740],{},"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.",[22,742,745],{"className":743,"code":744,"language":27},[25],"MaxDD % = max over t of [ (Peak(0..t) − Value(t)) \u002F Peak(0..t) ] × 100\n",[29,746,744],{"__ignoreMap":31},[10,748,749],{},"The result depends entirely on which curve you walk, and ShowMyTrades publishes both.",[751,752,753,772],"table",{},[754,755,756],"thead",{},[757,758,759,763,766,769],"tr",{},[760,761,762],"th",{},"Metric",[760,764,765],{},"Measured on",[760,767,768],{},"Open positions counted?",[760,770,771],{},"What it tells you",[773,774,775,791],"tbody",{},[757,776,777,782,785,788],{},[778,779,780],"td",{},[39,781,179],{},[778,783,784],{},"Equity (balance + floating P&L)",[778,786,787],{},"Yes",[778,789,790],{},"The real fall in what the account was worth at that moment",[757,792,793,797,800,803],{},[778,794,795],{},[39,796,396],{},[778,798,799],{},"Closed balance only",[778,801,802],{},"No",[778,804,805],{},"The fall in realised results",[10,807,808,811],{},[51,809,810],{"href":395},"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.",[10,813,814,815,134,818,821,822,825,826,828],{},"So an account showing ",[39,816,817],{},"Drawdown 41%",[39,819,820],{},"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 ",[124,823,824],{},"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 ",[51,827,351],{"href":350}," is for.",[14,830,46],{"id":45},[10,832,833],{},"Recovery is asymmetric, because the gain has to compound off a smaller base than the loss did.",[751,835,836,846],{},[754,837,838],{},[757,839,840,843],{},[760,841,842],{},"Maximum drawdown",[760,844,845],{},"Gain needed to reach the old peak",[773,847,848,856,864,872,880,888],{},[757,849,850,853],{},[778,851,852],{},"10%",[778,854,855],{},"11.1%",[757,857,858,861],{},[778,859,860],{},"20%",[778,862,863],{},"25.0%",[757,865,866,869],{},[778,867,868],{},"30%",[778,870,871],{},"42.9%",[757,873,874,877],{},[778,875,876],{},"50%",[778,878,879],{},"100.0%",[757,881,882,885],{},[778,883,884],{},"70%",[778,886,887],{},"233.3%",[757,889,890,893],{},[778,891,892],{},"90%",[778,894,895],{},"900.0%",[10,897,898],{},"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.",[10,900,901,902,905],{},"Maximum drawdown is also the number that sets your practical leverage ceiling. If a system has historically drawn down 30%, running it at double ",[51,903,904],{"href":53},"position size"," implies a 60% drawdown you have no evidence you can sit through.",[14,907,70],{"id":69},[10,909,910,911,913],{},"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 ",[39,912,87],{},", and the spread around that median is wide in both directions.",[10,915,916],{},[331,917],{"alt":918,"src":919},"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",[10,921,922],{},[124,923,924],{},"Median 9.7%, and the tail is longer than most published claims allow for.",[10,926,927,928,931,932,935],{},"At the far end, ",[39,929,930],{},"17.6% have fallen more than 50%"," below their peak and ",[39,933,934],{},"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.",[10,937,938,939,942,943,945,946,950,951,953,954,957,958,231],{},"The near end deserves the same scepticism: ",[39,940,941],{},"38.5%"," record a maximum drawdown under 5%. Some of those are genuinely conservative. Many are simply young. The median published account holds ",[39,944,91],{}," at a ",[51,947,949],{"href":948},"\u002Fglossary\u002Fwhat-is-average-trade-length","median trade length"," of ",[39,952,95],{},"; 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 ",[51,955,956],{"href":437},"tails need history behind them"," — which is why the figure is only worth much on a ",[51,959,961],{"href":960},"\u002Fglossary\u002Fwhat-is-a-verified-track-record","verified track record",[14,963,115],{"id":114},[10,965,148,966,968,969,134,971,973,974,976],{},[39,967,151],{}," panel on every published account page shows ",[39,970,179],{},[39,972,396],{}," on consecutive rows below ",[39,975,158],{},", both derived from the broker feed rather than self-reported. Compare them first; the divergence is the fastest read on the page.",[10,978,979,980,982,983,986,987,989],{},"The charts module includes a dedicated ",[39,981,179],{}," view, which plots daily drawdown as bars and so answers the question the headline percentage cannot: how ",[124,984,985],{},"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 ",[51,988,411],{"href":410}," runs the recovery table above against your own balance.",[14,991,194],{"id":193},[196,993,994,1000,1006,1012],{},[199,995,996,999],{},[39,997,998],{},"\"My maximum drawdown improved this year.\""," It cannot improve. It is a historical maximum, and a good year cannot un-print it.",[199,1001,1002,1005],{},[39,1003,1004],{},"\"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.",[199,1007,1008,1011],{},[39,1009,1010],{},"\"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.",[199,1013,1014,1017],{},[39,1015,1016],{},"\"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.",[10,1019,1020,1021,231],{},"For maximum drawdown in context with every other metric on a live account page, read ",[51,1022,451],{"href":450},{"title":31,"searchDepth":240,"depth":240,"links":1024},[1025,1026,1027,1028,1029],{"id":16,"depth":240,"text":17},{"id":45,"depth":240,"text":46},{"id":69,"depth":240,"text":70},{"id":114,"depth":240,"text":115},{"id":193,"depth":240,"text":194},"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.",{},[255,256,1033,464],"what-is-a-verified-track-record",{"title":726,"description":1030},"5.glossary\u002Fwhat-is-maximum-drawdown","Maximum Drawdown","ApNMddCmg0QCLnuOwuyL_buXf8nvEi3z-WICzHc5jDU",{"id":1039,"title":1040,"body":1041,"category":1235,"date":248,"description":1236,"draft":460,"extension":251,"meta":1237,"navigation":250,"path":53,"related":1238,"seo":1239,"stem":1240,"term":1241,"updated":248,"__hash__":1242},"glossary\u002F5.glossary\u002Fwhat-is-position-sizing.md","What Is Position Sizing? Formula and Lot Size Calculation",{"type":7,"value":1042,"toc":1228},[1043,1049,1051,1054,1060,1063,1069,1075,1078,1098,1104,1109,1111,1114,1122,1124,1137,1140,1154,1156,1163,1189,1191,1221],[10,1044,1045,1046,1048],{},"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 ",[51,1047,62],{"href":61}," profile, and it is chosen before the trade rather than discovered after it.",[14,1050,17],{"id":16},[10,1052,1053],{},"Three steps, in order.",[22,1055,1058],{"className":1056,"code":1057,"language":27},[25],"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",[29,1059,1057],{"__ignoreMap":31},[10,1061,1062],{},"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:",[22,1064,1067],{"className":1065,"code":1066,"language":27},[25],"Risk amount   = 10,000 × 0.01      = $100\nPosition size = 100 \u002F (50 × 10)    = 0.20 lots\n",[29,1068,1066],{"__ignoreMap":31},[10,1070,1071,1072,1074],{},"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 ",[51,1073,351],{"href":350}," placement cannot be decided separately.",[10,1076,1077],{},"Three methods dominate in practice:",[196,1079,1080,1086,1092],{},[199,1081,1082,1085],{},[39,1083,1084],{},"Fixed lot."," Always 0.10 lots, whatever the stop or the balance. Simple, and the risk per trade drifts constantly as both change.",[199,1087,1088,1091],{},[39,1089,1090],{},"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.",[199,1093,1094,1097],{},[39,1095,1096],{},"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.",[10,1099,1100],{},[331,1101],{"alt":1102,"src":1103},"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",[10,1105,1106],{},[124,1107,1108],{},"Which one an account uses is readable from the lot sizes alone.",[14,1110,46],{"id":45},[10,1112,1113],{},"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%.",[10,1115,1116,1117,1121],{},"Sizing is also where ",[51,1118,1120],{"href":1119},"\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.",[14,1123,70],{"id":69},[10,1125,1126,1127,1129,1130,1133,1134,1136],{},"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 — ",[39,1128,558],{}," have been ",[51,1131,1132],{"href":315},"more than 20% underwater"," at some point and ",[39,1135,562],{}," have lost more than half their peak value.",[10,1138,1139],{},"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.",[10,1141,1142,1143,370,1146,1149,1150,1153],{},"Context for who is doing the sizing: the median autotrading share on these accounts is ",[39,1144,1145],{},"99%",[39,1147,1148],{},"53.9%"," run above 90% automated, against ",[39,1151,1152],{},"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.",[14,1155,115],{"id":114},[10,1157,148,1158,1162],{},[51,1159,1161],{"href":1160},"\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.",[10,1164,1165,1166,1168,1169,1172,1173,1175,1176,1179,1180,1185,1186,1188],{},"On a published account page you can audit sizing rather than assume it. The ",[39,1167,640],{}," carries a ",[39,1170,1171],{},"Volume"," column showing the lot size of every individual trade, so a size that steps up after each loser is visible directly. ",[39,1174,648],{}," adds a ",[39,1177,1178],{},"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. ",[39,1181,1182],{},[51,1183,1184],{"href":704},"Total Lots"," in the ",[39,1187,121],{}," module gives the aggregate; across published accounts it stands at 1,724,575 lots traded.",[14,1190,194],{"id":193},[196,1192,1193,1199,1209,1215],{},[199,1194,1195,1198],{},[39,1196,1197],{},"\"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.",[199,1200,1201,1204,1205,1208],{},[39,1202,1203],{},"\"I risk 1% per trade, so my worst case is 1%.\""," Only with one position open. ",[51,1206,1207],{"href":478},"Five correlated positions"," at 1% each are one 5% trade wearing a disguise, and correlated pairs move together precisely when it hurts.",[199,1210,1211,1214],{},[39,1212,1213],{},"\"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.",[199,1216,1217,1220],{},[39,1218,1219],{},"\"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.",[10,1222,1223,1224,231],{},"For the full set of risk and sizing tools and when each one applies, see ",[51,1225,1227],{"href":1226},"\u002Fguides\u002Fforex-calculators-guide","the forex calculators guide",{"title":31,"searchDepth":240,"depth":240,"links":1229},[1230,1231,1232,1233,1234],{"id":16,"depth":240,"text":17},{"id":45,"depth":240,"text":46},{"id":69,"depth":240,"text":70},{"id":114,"depth":240,"text":115},{"id":193,"depth":240,"text":194},"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.",{},[255,257,463,719],{"title":1040,"description":1236},"5.glossary\u002Fwhat-is-position-sizing","Position Sizing","qP5mfGAxSuWSiccKuy0i_N8LQtpN2UHwOG-ZOVxOViU",1787415695247]