Home Glossary Absolute drawdown
Absolute drawdown
Absolute drawdown — How far below your STARTING balance the account ever fell — a different question from maximum drawdown, and the one that matters at the beginning.
Maximum drawdown asks how far you fell from your best moment. Absolute drawdown asks how far you fell below where you started. They answer different questions, they are often very different numbers, and MetaTrader reports both because both are useful.
In plain English
Absolute drawdown is the initial deposit minus the lowest balance the account ever reached. If it never dipped below the opening balance, absolute drawdown is zero — however violently the account moved once it was in profit.
That property is what makes it specific rather than redundant. It is a measure of capital risk: how much of the money you originally put in was ever actually at stake. For a new account it is the number that matters most, because everything else is unrealised.
It goes stale, though, and quickly. Once an account is well into profit, absolute drawdown stops moving — a 40% fall from a much higher peak may never approach the original deposit, so the figure sits at zero while the account is losing a great deal of money. At that point maximum drawdown is the live number and this one is a historical note.
The formula
Absolute drawdown = initial deposit − lowest balance ever reached Maximum drawdown = largest peak-to-trough fall, measured from the running high
- Initial deposit — the first positive balance operation in the file, or the first balance point if the file has no deposit row.
- Lowest balance — the minimum of the whole balance curve, wherever it occurred.
If the account never traded below its opening balance, absolute drawdown is zero. That is not evidence of safety — it usually means the account went into profit early and has not been tested since.
Worked example — the demo account
The bundled demo account: opening $25,000.00, 96 closed trades.
| Initial deposit | $25,000.00 | |
|---|---|---|
| Absolute drawdown | $617.22 | the deepest dip below the opening balance |
| Maximum drawdown | $3,005.56 | the deepest fall from any running peak |
| Ratio between them | 4.9× | |
| Final balance | $26,793.45 |
The account dipped $617.22 below its deposit at worst — but fell $3,005.56 from a peak later on.
A factor of nearly five between the two figures, from the same trades. Quoting only the absolute figure would describe this account as having risked about 2.5% of its capital; quoting only the maximum would describe a 10.97% fall. Both are true and they are answers to different questions.
The sequence explains it. The account dipped modestly early, climbed to a high, then had its worst run from up there. Absolute drawdown captured the early dip and has been frozen ever since; maximum drawdown captured the real event.
Every figure above is from the demo account TapeSheet ships with — 96 closed trades, generated from a fixed seed. Open the same account →
What this does not tell you
The caveat is the part worth reading. Most tools put it in a footer, if they print it at all.
- It goes stale. Once an account is meaningfully in profit the figure stops responding to anything, and a large recent loss can leave it completely unchanged.
- It is balance-based, like every drawdown from a statement, so the true equity low was deeper by an amount the file cannot show.
- Deposits distort it. Adding funds raises the balance floor, so an account topped up during a bad run shows a smaller absolute drawdown than it earned. The initial deposit is the baseline, and later deposits quietly flatter the number.
- Zero is not a safety record. It usually means the account got into profit before it got into trouble, which is sequence rather than skill.
Where TapeSheet shows it
Shown beside maximum drawdown on the Overview, with both labelled so the difference is visible rather than assumed, and with the balance-based caveat printed next to the pair rather than in a footer.
Questions
Which drawdown should I quote?
Maximum drawdown, in almost every case — it stays live and it is what other traders and prop firms mean by the word. Absolute drawdown is worth adding for a young account, where it is the honest measure of how much of the original capital was ever genuinely at risk.
Why is my absolute drawdown zero?
Because the balance never traded below the opening deposit. On a profitable account this is common and unremarkable. It does not mean no drawdown occurred — check maximum drawdown, which will usually be a substantial figure while this one reads zero.
Does MetaTrader compute it the same way?
MT4’s own report shows absolute, maximal and relative drawdown, and its absolute figure uses the same definition as ours: initial deposit minus minimum balance. Small differences usually come from the date range or from how balance operations mid-period are treated, so compare the deposit total first.
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