Open course in trader judgement
What Is Drawdown in Trading? An Open Course
What is drawdown in trading, and why does it end more trading careers than any single loss? Peak-to-trough losses, the arithmetic of recovery, losing streaks, and how size decides the drawdown you will live through.
What is drawdown in trading? It is the fall in an account from its highest value to its lowest point before a new high. Every method has drawdowns, including good ones. What matters is how deep they go, how long they last, and whether you are still trading the plan at the bottom.
Why does drawdown matter more than return?
Because losses compound against you. An account that loses 20% needs 25% to recover; one that loses 50% needs 100%. A trader who sizes for the best case meets the worst case sooner or later, and the course shows in plain arithmetic how often it comes.
How do you keep a drawdown survivable?
By choosing the risk per trade from the drawdown you can accept, not from the profit you hope for. The course works through the numbers for a few common win rates and payoffs, without formulas beyond arithmetic.
Where does this course lead?
To Stop Losses and Position Sizing in the Foundation Certificate in Trading, which turns these ideas into a sizing rule you apply to every trade.
What you will be able to do
- Calculate the drawdown and the maximum drawdown of a trading record.
- Explain why a loss of half an account needs a gain of 100% to recover.
- Estimate the losing streaks a method with a given win rate will produce.
- Choose a trade size that keeps the expected worst drawdown within a set limit.
Syllabus, module by module
Drawdown defined
Peak, trough, depth and duration, measured on a real account curve.
The arithmetic of recovery
Why losses and gains are not symmetrical, in a table every trader should know.
Losing streaks
How often a method that wins 55% of the time loses eight in a row.
Size and drawdown
How risk per trade sets the depth of the drawdown you should expect.
How the certificate is earned
Self-check questions at the end of each lesson. The course is not assessed. Completing every lesson earns a Certificate of attendance, which states that the course is not assessed. Read how certification works.
Questions applicants ask
What is a good maximum drawdown?
There is no single number; it depends on the method and on what you can bear without breaking your plan. Many professional desks and prop firms stop a trader at a loss of 5 to 10% of the allocated capital. The course shows how to choose your own limit and size trades to fit it.
Is this course really free?
Yes. There is no charge and no payment details are asked for. You receive a certificate of attendance on completion.