Module 6: Risk Management
Drawdown
5 min read
Drawdown is the decline from a peak in your account to a later low.
The recovery problem
Losses require larger percentage gains to recover. A 10% drawdown needs about 11% to recover; 25% needs 33%; 50% needs 100%.
Limiting drawdown is easier than recovering from it.
Key takeaways
- Recovery requires larger gains than the loss.
- Track maximum drawdown.
- Reduce size during losing periods.
Educational content only, not financial advice. Trading forex and CFDs involves significant risk of loss.