Trading glossary
Drawdown
Drawdown is the decline in your account equity from a peak to a subsequent trough, usually expressed as a percentage. Maximum drawdown measures the worst peak-to-trough loss over a period, and it matters because it defines how much pain a strategy can inflict before recovering. Prop firms enforce strict drawdown limits on funded accounts, so funded traders must track drawdown continuously. In a journal such as DuskAnalyst, drawdown is calculated automatically from your trade history and displayed alongside your profit target, so you can see at a glance whether you are trading inside your firm's rules.
Why it matters for your trading journal: Drawdown measures how far an account falls from its peak, and it is the metric prop firms actually gate on. Journaling the drawdown path shows whether losses are controlled or compounding.
Example: Example: an account peaks at $10,000 and falls to $8,500 - that is a 15% drawdown, close to many firms' 10-15% limits.
What is Drawdown in trading?
Drawdown is the decline in your account equity from a peak to a subsequent trough, usually expressed as a percentage. Maximum drawdown measures the worst peak-to-trough loss over a period, and it matters because it defines how much pain a strategy can inflict before recovering. Prop firms enforce strict drawdown limits on funded accounts, so funded traders must track drawdown continuously. In a journal such as DuskAnalyst, drawdown is calculated automatically from your trade history and displayed alongside your profit target, so you can see at a glance whether you are trading inside your firm's rules.