What is Drawdown?
Updated October 17, 2026
Drawdown is how far your account drops from its highest point before it recovers.
If your account goes from $1,000 to $800, that's a 20% drawdown. It's the dip you have to sit through.
Every strategy has drawdowns, even good ones. The question is how deep they get.
When you look at a copy trader or AI bot, check drawdown as closely as profit. Big gains with huge drawdowns usually end badly.
Example
A bot shows great monthly gains but had a 60% drawdown last year. That's a warning sign.
Questions people ask
What's an acceptable drawdown?
It's personal, but many careful traders try to keep it well under 20% to 30%.
Is drawdown the same as a loss?
Drawdown is the drop from a peak. It becomes a real loss if you close or the account never recovers.
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