When you look at a trading account, profit is the first thing you notice. But the number that best describes risk is drawdown: the fall from the account’s highest point to the lowest point that follows.
What drawdown is
If an account rises from 10,000 to 12,000 dollars and then falls to 9,600, the drawdown is 2,400 dollars, or 20% from the peak. The key point is that recovery is not symmetrical: after a 20% fall you need a 25% gain to get back to the high.
| Drawdown | Gain needed to recover |
|---|---|
| 10% | 11.1% |
| 25% | 33.3% |
| 50% | 100% |
| 75% | 300% |
Try other values in the drawdown table of our calculators.
Balance vs. equity
Balance only changes when trades are closed. Equity includes open trades. An EA can show a balance that always rises while it holds losing positions open: in that case the equity drawdown will be much larger. Always look at the equity figure.
How to read it on Myfxbook
- Drawdown: in the account header, next to the gain. It is the historical maximum.
- Growth chart: switch on the equity view to see the real dips, not just the balance.
- Stats tab: check the worst trade, losing streaks and average trade length.
- Verification: make sure track record and trading privileges are verified.
What drawdown is acceptable
It depends on your tolerance and the account’s goal. As a reference, many prop-firm accounts cap total loss at 10% and daily loss at 5%. If the strategy exceeds those values in its history, it is not suitable for that kind of account as configured.
Conclusion
Before looking at how much an account made, look at how much it lost and how long it took to recover. You can review our public accounts in the trading examples section.