Maximum drawdown: the number that decides if you can stick with a strategy
How maximum drawdown is measured, why closed-trade reports hide the deepest dips, and how to set a drawdown you can actually live with.
Maximum drawdown is the largest fall in your account from a high point before it makes a new high. It is the number that decides whether a real person keeps a strategy running or switches it off at the worst possible moment.
Closed trades versus every minute
Many reports only update the balance when a trade closes. That hides what happened while trades were open. A trade that went deep against you and then recovered never shows up, yet you would have watched your equity drop on screen. Measuring the account every minute, with open trades marked to the current price, gives the true picture.
In our own research, sizing from closed-trade drawdown understated the real dip by 1.2 to 3 times on some instruments. That is why every lot in the Arrissa REX 9 AI table is sized on the minute-level drawdown, with open trades included.
Measure it against what you started with
We express drawdown as a share of the starting balance. A fall of $2,000 on a $10,000 account is a 20% drawdown. That makes the number easy to plan with: choose the fall you can accept, and the lot size follows. In the app this is the risk temperature.
Recovery takes longer than the fall
- Losing 10% needs an 11% gain to get back.
- Losing 25% needs 33%.
- Losing 50% needs 100%.
A backtest shows the deepest dip that history produced. Live markets can produce a deeper one, so leave room: pick a risk temperature a step below the most you could stomach.
Start the bot, watch your free $10,000 demo trade, and connect your Exness account when you are ready.
Read next: Overfitting, out-of-sample and walk-forward tests explained
Risk warning. Trading leveraged products such as CFDs carries a high risk of losing money. Backtest figures are simulations, not real results, and past performance does not guarantee future results. Read the risk disclosure before you connect an account. Nothing here is financial advice.