Definition
Max drawdown
The total loss limit for the life of the account, typically 8–12% of starting size.
If a $100,000 account has a 10% max drawdown, the account fails when equity (or balance, per the firm's definition) reaches $90,000 — or a trailing floor above that, if the drawdown trails.
Always convert the percentage into dollars and into 'how many of my losing trades' — that's the number that keeps you honest mid-week.
Related terms
General industry definitions — individual firms define terms differently in their own ToS; the decoded rulebook for each firm is the source of truth. Educational, not financial advice.