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Forex glossary

Drawdown

Drawdown is the fall in account value from a previous high to a later low, usually quoted as a percentage of the peak. A balance that moves from ten thousand to eight thousand has a twenty percent drawdown. Losses recovered later still count as drawdown while they are open, and the percentage needed to climb back grows as the drawdown deepens.

Related term

Risk-Reward Ratio

The risk-reward ratio compares what a trade risks to what it targets, usually written as something like 1:2 where the take-profit distance is twice the stop-los…

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