Drawdown in Expert Advisors, explained

Balance drawdown versus equity drawdown

Balance changes only when trades close. Equity includes open trades. A system can show a calm balance while equity dips deeply in between. Use equity drawdown as the true risk figure.

Absolute, relative and maximal

MT5 reports absolute drawdown from the initial deposit, maximal drawdown as the largest peak-to-trough fall in money, and relative drawdown as the same fall in percent. Read the percent on equity first.

Drawdown and recovery

A 50% fall needs a 100% gain to recover. The deeper the drawdown, the less the headline profit tells you about what an investor lived through.

Time under water

Look at how long the account stays below its previous peak. A shallow but very long drawdown can be harder to hold than a short deep one.

Sizing risk around drawdown

Pick the drawdown you can tolerate, then choose the preset or lot size whose real-tick drawdown fits inside it, with margin for being wrong. Backtests rarely show the worst case that will come.

Compare with live

Compare the live signal's drawdown with the backtest's for the same dates. A live drawdown larger than the backtest's is a warning to reduce size.

Drawdown, named and published

Eudora shows the equity drawdown next to every result, in every mode. Crux Safe closes +89% with a 1.3% equity drawdown, the cleanest curve in the family, and its profit factor stays between 4.51 and 4.66 across all five modes, because quality belongs to the engine and not to the leverage.