Reading a drawdown correctly
Drawdown is the deepest fall from a previous peak. Computing it on the wrong series is the most common error in this category of tool.
The account value trap
If a trader withdraws half their balance, account value halves. Computed naively, that reads as a 50 % drawdown — a catastrophic loss that never happened.
Drawdown here is computed on cumulative PnL, which is unaffected by deposits and withdrawals. When the ledger is available, we also adjust the equity curve for flows.
Depth, and time to recover
Two traders with an identical 20 % maximum drawdown are not comparable if one recovered in six days and the other took four months. Recovery time is the part that determines whether a strategy is survivable.
What a percentage needs
A drawdown percentage needs a capital base. We estimate initial capital from account value at the start of the window adjusted by net flows. When the ledger is unavailable, we publish the dollar figure and mark the percentage unavailable rather than inventing a denominator.