Glossary

What is Drawdown?

The drop in account value from a peak to a later low, usually shown as a percentage.

Drawdown measures how far an account has fallen. Prop firms set a daily and a maximum drawdown limit; touching either ends the account.

Formula

Drawdown % = (peak − current) ÷ peak × 100

An account peaks at $52,000 and falls to $49,400: drawdown = 5%.

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