Evidence before automation
Forex EA drawdown: the risk number that needs context
Drawdown describes a decline from a prior peak. In automated trading it helps show how much deterioration occurred before recovery—or before the record ended.
Risk note: Automated trading can lose money. Historical or simulated performance does not guarantee future results.
Why the definition matters
Balance-based figures can differ from equity drawdown when open positions carry unrealized losses. Ask what measure a vendor or monitoring service uses before comparing percentages.
Low historical drawdown is not a guarantee
A backtest can understate future risk if its data, execution assumptions, strategy parameters or market regime differ from future conditions. Position sizing can also transform the same strategy into a very different risk profile.