Drawdown

A drawdown is the fall in an account from its highest value to a later low, given as a percentage. The maximum drawdown is the deepest such fall over a period. Recovering takes a bigger gain than the loss: a 20% drawdown needs 25%, and a 50% drawdown needs 100%.

Drawdown measures how painful a strategy is to hold. A strategy with a high return and a 50% drawdown is one few traders can stick with, which is why risk per trade is usually set from the worst drawdown you could sit through.