What is Drawdown?

Drawdown refers to the reduction of one's capital after a series of losing trades. It is a crucial metric for traders as it helps them understand the risk of their trading strategy. A drawdown is typically expressed as a percentage of the peak capital.

Importance of Managing Drawdown

Managing drawdown is essential for long-term trading success. Traders must implement strategies to minimize drawdowns and protect their capital, ensuring they can continue trading even after losses.