Maximum Drawdown

Maximum drawdown, often written max DD, is the largest peak-to-trough decline an account or strategy suffered over a given window. Where drawdown is the running concept, maximum drawdown is one number: the deepest valley on the whole equity curve. It's a backward-looking risk statistic, quoted as a percentage or a dollar amount, used to compare how badly different systems can hurt.

It's a summary metric, not a live limit. Maximum drawdown tells you the worst that has already happened in the sample you're measuring; it says nothing about whether a worse decline is coming. Read it as a floor on your expectations — the future can always be uglier than the backtest — not as a ceiling on risk.

Maximum drawdown matters because recovery math is brutal and asymmetric. A 50% drawdown does not need a 50% gain to get back — it needs a 100% gain, because you're now growing a much smaller base. A 20% drawdown needs 25% to recover; a 33% drawdown needs 50%; a 50% drawdown needs 100%. The deeper the hole, the more disproportionate the climb out, which is why a large max DD can quietly doom a strategy even when its average return looks fine.

For prop traders, the number also has to be read against the account's hard rules. A strategy with a historical 8% maximum drawdown is a different proposition on a 10%-trailing account than on a 4%-trailing one — in the second case its own worst-case history would already have breached the firm. Comparing a strategy's max DD to the account's drawdown limit is a basic survivability check before you ever route a signal.

MimikTrader reports maximum drawdown as a key performance metric in the analytics dashboard, computed from your account's fill history so you can see each account's deepest peak-to-trough decline over the period you're reviewing. It sits alongside the other KPIs (profit factor, win rate, expectancy) and is part of the Pro plan's analytics. It's a performance statistic for reviewing what happened, distinct from the trailing-drawdown rule the risk engine enforces in real time.