What Is Drawdown?
Drawdown measures the decline from a previous equity or balance peak to a later low point.
Why drawdown matters
Profit alone does not describe the experience of getting there. Drawdown helps show how much decline occurred along the path.
Peak to trough
A drawdown begins from a previous peak and measures the decline until a lower point is reached before recovery.
Use it with context
Drawdown should be considered together with return, trading frequency, position sizing and the length of the review period.