Drawdown

Drawdown measures how far an account has fallen from its most recent equity peak, expressed as a percentage or dollar amount. It's the standard way to quantify the pain of a losing streak and is distinct from a single loss — a 20% drawdown might come from one bad trade or from twenty small ones. Because recovering from a drawdown requires a disproportionately larger percentage gain (a 50% drawdown needs a 100% gain to recover), controlling drawdown size is central to long-term survival.