Concept · Reading the returns
The decline in account equity from a peak to a subsequent trough. Reported in dollars (DD$) and as a percentage of the peak (DD%). The single most important risk metric for any leveraged strategy.
Your account equity rises and falls over time. A drawdown is the worst stretch — the largest "peak-to-valley" drop measured along the equity curve. If your account peaked at $1,000 and then dropped to $700 before recovering, that's a $300 drawdown, or 30%.
Drawdown matters more than final PnL for one simple reason: you have to live through the drawdown to collect the PnL. A strategy that ends up making $1,000 after first losing 95% of your capital is mathematically a profit but practically a catastrophe — you would have stopped trading it, run out of margin, or been liquidated long before the recovery.
For an equity curve E_t over time, the running peak is P_t = max(E_0, ..., E_t). Drawdown at time t is:
DD_t = P_t − E_t (in dollars)
DD%_t = (P_t − E_t) / P_t (as a percentage)
The "max drawdown" reported in analytics is max(DD_t) over the full backtest window.
Many high-leverage strategies in this fleet have drawdowns deep enough that a real account would have been wiped out (or at minimum, margin-called and force-deleveraged) before any recovery arrived. The simulator continues taking trades past the point a real broker would have stopped — so headline returns on high-drawdown strategies are fictional.
The honest deployable criterion: max drawdown shallow enough that your real capital survives it. Aspirationally: max DD% < 20%.
The cleanest way to see drawdown's stakes is to hold the signal fixed and vary only the leverage (the multiplier on position size — 2× means twice the exposure, twice the swing).
Across the whole fleet, the median max drawdown climbs steeply with leverage — drawdown is the price you pay for the amplified returns leverage promises:
| Leverage | Median max drawdown |
|---|---|
| 1× | −4.4% |
| 2× | −28% |
| 10× | −84% |
| 50× | −98% |
| 100× | −98.5% |
By 10× the typical strategy has already lost most of the account at its worst point; by 50× it is all but wiped. This is why drawdown — not headline return — is the metric that decides whether a leveraged strategy is deployable.
The same DD% means very different things on different account sizes. A 50% drawdown on a $1M account is recoverable (managed account, lots of cushion). A 50% drawdown on a $200 account is psychological devastation and probably ends in capitulation. **Always cross-check DD$ against your actual deployable capital.**
The same set of trades arranged in a different order produces different drawdowns. A strategy that takes 7 losses then 3 wins has a different DD than one that takes 3 wins then 7 losses. The reported max DD is the realized drawdown from this particular historical ordering — not the worst case. See path dependence.
wiki/qa-sessions/2026-05-17-session.md#q9 (first formal entry; referenced throughout earlier sessions)/api/analytics maxDrawdown (%) and maxDrawdownDollar fieldsRelated concepts
See it in a real result →Put it to the test
Spawn your variant, run it on the same engine, and read the edge-significance verdict — before you risk real money.