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Intraday drawdown

The worst peak-to-trough equity dip within a session, which is invisible in daily closing data and is what you actually lived through.

An account that opens flat, trades minus 4% by lunch and closes plus 0.5% shows a green day in any daily record. The 4% is what you experienced, and it is what a prop firm's daily-drawdown rule would have measured.

The gap between intraday and end-of-day drawdown tells you something specific about the strategy: wide dips with good closes usually mean entries are early, exits are patient, or size is too large for the noise band. It is one of the few statistics that points directly at a fixable behaviour.

It also sets the limit you must trade under. If your worst intraday dip is routinely 4% and an evaluation account fails at 5%, you do not have a strategy problem, you have a sizing problem - and daily-close statistics will never show it to you.

Related: drawdown, daily-loss-limit, daily-drawdown, high-water-mark

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

An equity curve and its drawdownAn account balance rising over a year, falling from a peak to a trough, then climbing back to the old peak.ACCOUNT EQUITY$20k$12k$8k024681012TIME (MONTHS)PEAK $16,000TROUGH $12,000DRAWDOWN−25%RECOVERY
Equity curve and drawdown. An account balance plotted month by month. The fall from the $16,000 peak to the $12,000 trough is a 25% drawdown, and the shaded area lasts until the balance climbs back to the old peak.

Educational only, not advice. Spotted an error? Post in Site Feedback.