PAMM Wealth Lab · Education
Drawdown is a loss measure, not a guarantee.
Before looking at returns, understand how much can be lost, how fast, and whether you can get your money out when you want it.
What is drawdown?
Drawdown is the fall from a peak account value to a later low. A fall from $10,000 to $8,500 is a 15% drawdown, and getting back to $10,000 then needs a gain of about 17.65%.
Recovery math
| Drawdown | Gain needed to recover |
|---|---|
| 10% | 11.1% |
| 15% | 17.6% |
| 25% | 33.3% |
| 50% | 100% |
Losses compound against you: the deeper the drawdown, the harder the climb back.
What a past drawdown figure does not tell you
A past maximum drawdown is historical. A stated risk limit or automated exit is not a promise that losses cannot exceed it — price gaps, leverage and execution conditions can change realized losses.
Other risks to weigh
- Leverage — magnifies gains and losses alike.
- Counterparty — you depend on the provider’s solvency, conduct and how funds are held.
- Manager — strategy drift, concentration or a change in risk appetite.
- Withdrawal — dealing windows, open positions and fees may delay or reduce what you receive.
- Jurisdiction — protections and dispute options depend on where the provider is established.
Questions
Does maximum drawdown cap my loss?
A historical figure does not. A contractual limit or automated control must be understood on its own terms and can still involve execution risk.
Can I lose more than I allocate?
Check the agreement. Some leveraged arrangements can create obligations beyond the allocation; others limit loss to the account balance.
Affiliate disclosure: WorkWithBar has an affiliate relationship with Crucial Markets and may receive compensation from referrals. That creates a financial incentive to refer readers. Educational content is not a personalized investment recommendation.
Crucial Markets’ public website states it does not solicit U.S. citizens and lists restricted jurisdictions. Being able to register is not proof you are eligible — confirm the restrictions that apply to you before opening an account.
Trading leveraged products such as CFDs and forex carries a high risk of loss, potentially including all capital allocated. Past results are not a forecast.
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Written by Jabbar “Bar” Fairweather for WorkWithBar. Last reviewed 2026-09-29. Educational content only — not personalized investment, legal or tax advice. Spotted an error? Send a correction.