Understanding Drawdown and Equity Stops
Measure decline correctly and configure a loss boundary before launch.
Education is not a profit promise or personal financial advice. Validate on demo, understand the complete risk, and keep control of every bot you start.
What drawdown measures
Drawdown is the decline from a previous equity peak. A 20 percent loss requires a 25 percent gain to return to the starting value, so recovery becomes harder as the loss deepens.
Equity stop
An equity stop is the maximum session loss you authorize. It is a boundary, not a prediction. Contract settlement and execution timing can create slippage, so configuration preflight also checks the complete possible recovery exposure.
A practical sequence
Choose the acceptable account loss first. Then size the strategy to fit it. Do not choose an attractive stake and increase the stop afterward merely to make the configuration pass.