What Is Maximum Drawdown?
Drawdown measures a decline relative to a reference value. In trading evaluations, a maximum drawdown rule defines a threshold, but the reference and monitored metric depend on the particular rules.In this guide
Distinguish static from trailing
A static example with $10,000 initial balance and $1,000 permitted loss has a $9,000 threshold. An uncapped trailing example using a $10,500 recorded peak and the same $1,000 amount has a $9,500 threshold. A rule that locks the threshold at a particular level needs a different model.
Keep daily and overall limits separate
A daily baseline of $10,000 and $500 daily allowance gives a $9,500 daily threshold. Current equity of $9,800 leaves $300 of daily headroom. Under the static overall example it leaves $800 overall. The more restrictive threshold is the immediate constraint.
Read the actual rule text
Some rules use balance, others equity; daily baselines, reset zones, commissions and floating P/L treatment vary. Curizora uses manually supplied amounts and treats touching a threshold as breached. It does not fetch accounts, reset automatically or certify compliance. Enter the correct historical high-water mark and update the baseline after the firm’s reset.
Distinguish drawdown from recovery
A fall from a $10,000 peak to $9,000 is a $1,000 drawdown, or 10% of the peak. Returning from $9,000 to $10,000 requires a gain of $1,000 ÷ $9,000, about 11.11%. The percentages differ because their starting values differ. A 10% gain after a 10% loss does not restore the original value.
Compare a fixed and a moving threshold
In a hypothetical fixed model, a $1,000 allowance below $10,000 sets a $9,000 floor. In a model that trails the peak by $1,000 without a cap, a new $10,500 peak moves the floor to $9,500. These are examples, not the rules of a named provider.
Does the tool track my account automatically?
No. Enter the relevant starting value, peak, equity and allowance yourself. Real programs may use balance or equity, daily reset times, trailing caps and special payout rules. A manually configured estimate cannot confirm compliance with a provider’s current agreement or detect intraday breaches.
Try the related calculator with your own inputs and review its assumptions.
Further reading: Calculation methodology and related guides.
Educational information, not personalized investment advice. Verify broker rules and contract specifications.