Maximum drawdown explained: balance vs equity, and why ours can't be reset
ConfirmedTrades team · 30 March 2026 · 7 min read
The difference between balance and equity drawdown, how ConfirmedTrades measures both, and why the anti-cheat ledger keeps the worst value forever.
What drawdown measures
Drawdown is the fall from a peak to the next trough, expressed as a percentage of that peak. If an account rises to $10,000 and then falls to $7,000 before making a new high, it experienced a 30% drawdown. Maximum drawdown is the largest such fall over the whole history.
It matters more than gain for one practical reason: it is the loss you would have had to sit through to collect the gain. Most people who follow a strategy quit during the drawdown, not after it. If you would not tolerate a 30% fall, a strategy (or a forex robot) whose history contains one is not for you, whatever it returned.
Balance drawdown vs equity drawdown
Balance only changes when a trade closes. Equity includes open positions at their current market value. The two drawdowns can tell very different stories.
A grid or martingale Expert Advisor is the classic case. It closes winners small and often, so the balance curve rises in a smooth staircase and balance drawdown looks tiny. Meanwhile, a basket of open losers may be sitting on the account at a 40% floating loss. That loss is real, it is the margin the broker is holding, and it only disappears from the balance chart because nothing has been closed yet. Equity drawdown shows it; balance drawdown hides it.
The opposite case exists too. A strategy with wide stops will show equity dips that never turn into closed losses. That is less worrying, but it still tells you how much heat the strategy takes.
How ConfirmedTrades measures it
The analytics compute maximum drawdown on the time-weighted growth index, so deposits do not mask a fall and withdrawals do not create a fake one. The equity stream from the connector is folded into that index, which is why a floating loss shows up as a dip on the growth chart before any trade is closed.
The Glance hub's money-and-scale column shows two extra figures: Max DD (balance) and Max DD (equity), in both currency and percent. These come from a separate record described below.
The anti-cheat drawdown ledger
There is an old trick for cleaning up a bad drawdown: delete the account from the platform, reconnect it, and let the history start fresh from a point after the damage. Or, more subtly, close a losing basket, wait, and hope the platform's rolling window forgets.
ConfirmedTrades keeps a drawdown ledger per broker account, keyed on the broker server and login rather than on the platform record. Every sync updates it with the worst balance and equity drawdown seen, in currency and percent. Peaks only ever rise and the worst values only ever grow; nothing in the ledger can be reduced by the owner. Deleting the account on ConfirmedTrades and reconnecting the same broker login picks up the same ledger, so the worst drawdown is shown again.
That is what the Max DD (balance) and Max DD (equity) figures in Glance are. They are not a rolling-window number. They are the worst it has ever been since the account was first connected.
Reading drawdown alongside gain
Two ratios do most of the work. Recovery factor is net profit divided by maximum drawdown: how many times over the strategy has earned back its worst loss. Anything under about 2 on a long record means the gain is not much bigger than the pain. The Score's risk-control component uses maximum drawdown for most of its 25 points, with smaller parts for chance of ruin and recovery factor, so a deep drawdown costs an account directly.
Also look at how long the drawdown lasted, not just how deep it went. A 20% fall recovered in two weeks is a different experience from a 20% fall that took eight months. The monthly calendar on the account page makes the duration obvious.
Drawdown and your own risk
A historical drawdown is a floor, not a ceiling. The next one is usually worse, because the history only contains the market conditions the strategy has already met. A common rule is to assume the next maximum drawdown will be at least one and a half times the historical one, and to size your exposure so that you could sit through that.
The risk of ruin calculator turns a win rate, payoff ratio and risk per trade into a probability of hitting a given loss. Run it with the account's numbers and your own risk. If the answer is uncomfortable, the gain figure does not matter.
Do it in one place
On ConfirmedTrades, every published account shows its verification badges, an AI strategy analysis that flags martingale, grid and missing stop-losses, the full drawdown and risk stats, and execution costs per symbol — so you can vet a strategy before you trust it, or prove your own.