Drawdown
The fall from a peak in account value to a later low, often given as a percentage. Max drawdown is the largest such fall.
Why it matters for AI trading tools
It shows how painful a strategy's worst stretch was. Our library has a max drawdown script.
Related on TraderStacks
More terms: Paper trading · Sharpe ratio · all terms
Education only. This definition explains a concept; it is not investment advice or a suggestion to trade.