How to Read an Equity Curve

An equity curve in five lines

An equity curve is the account drawn as a line with one point per closed trade, the running total of everything so far. Four things are read off it. The slope, how fast it climbs, which is the average pips per trade over the run, where a pip is the fourth decimal place of the price. The dips, every fall from a high, of which the deepest is the drawdown. The flats, stretches with no new high, of which the longest is how long patience was needed. And the last part, because a curve that made its total early and drifted since is a different rule from one still climbing. The example is the plain 10:00 to 18:00 rule on the euro, 135 trades in 2026: a peak of 270.5 pips at trade 51 and an end at 150.3.

A heart trace on a monitor

Picture a heart trace on a monitor. The number beside the screen is the total, and it is the same number whether the trace is steady or wild. A nurse does not read the number; a nurse reads the trace, because the trace shows the shape of what is happening, the regular beats and the irregular ones, the long pause and the spike, and the number cannot. The equity curve is that trace for a rule. The same total can sit at the end of a calm climb or of a plunge and a recovery, and only the line tells you which.

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