Drawdown

What are drawdowns?

A drawdown is an extended series of losing trades by a trader. For example, if an account has been managed from an initial capital of € 10,000 to € 8,000 due to a sustained series of losses, the drawdown corresponds to 20 %. The trader would have to generate 25% profit (EUR 2,000/8,000 * 100 = 25% profit) to bring the account back to the starting capital.