Drawdown measures how much an account falls from a previous high before recovering, usually shown as a percentage. It is a key risk metric: a large drawdown is hard to recover from, so managing it is central to survival as a trader.
Forex Term
Drawdown
The drop from an account's peak to its lowest point.
Example
An account falling from $1,000 to $800 has a 20% drawdown.
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Risk
Forex and CFD trading involves significant risk of loss and is not suitable for all investors. Leverage can work against you. This content is educational and not financial advice — always do your own research.