How to Calculate Maximum Drawdown

Three lines

The sum needs three lines. The first is the equity after each closed trade: on the ten-day list — a five-thousand-dollar account, one lot of the euro against the dollar bought at each day's open and sold at its close, 24 August to 4 September 2026 — it runs 4,871, 5,013, 4,785 and so on to 4,471. The second is the peak so far: the highest equity seen up to that point, which only ever steps up, and here steps up once, to 5,013 after 25 August. The third is the gap between them on each day. The maximum drawdown is the widest that gap ever gets: $912, after the 28 August loss took the equity to 4,101.

The same ten as columns

As columns the sum is three subtractions per row. Equity after the trade; the peak so far, which is the larger of yesterday's peak and today's equity; and peak minus equity, the gap. Read down the gap column and the largest number is the answer. On this list it is $912 on 28 August, 18.2 per cent of the peak, and the gap never closed: the equity climbed back to 4,594 on 3 September but not to 5,013, so the account was still in that drawdown on the last day.

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