Drawdown is the distance between your equity PEAK and where you are now — and it's the number professional risk managers actually watch, because it measures the worst experience of riding with you. The brutal part is recovery math: −10% needs +11% back, −25% needs +33%, −50% needs +100%. Losses cost more than they look.
Managing to the peak
- Set a personal daily stop (e.g., −3 losses or −5%): hit it, session over. The market reopens tomorrow; blown discipline doesn't.
- After each new equity peak, tighten up — give back a fixed fraction of the run-up, not all of it.
- Cut size in half after two consecutive losing days. Trade small until the process feels clean again.
Every professional evaluation — including any funded-account model — fails traders on max drawdown, not on missed profits. The market always offers another entry; a blown drawdown limit offers nothing.