The largest peak-to-trough decline of an equity curve, as a percentage of the peak.
Max drawdown caps the worst-case scenario you have observed historically. For copy trading, treat it as a hard floor of expected loss. Below 20% = the strategy has weathered volatility without blowing up. Above 40% = expect a similar or worse drawdown ahead.
Max drawdown caps the worst-case scenario you have observed historically. For copy trading, treat it as a hard floor of expected loss. Below 20% = the strategy has weathered volatility without blowing up. Above 40% = expect a similar or worse drawdown ahead.