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Absolute, maximal and relative drawdown in MetaTrader
MT4 prints three drawdown numbers on every statement, and they are not three views of the same thing. The one most traders quote first, absolute drawdown, is usually the least useful of the three — often reading zero on an account that has had real, meaningful pullbacks along the way.
The three fields as MetaTrader prints them
Checked directly against MetaQuotes' own documentation rather than the forum threads that currently rank for these terms, several of which contain real errors specifically about relative drawdown: Absolute Drawdown — "the largest loss below initial deposit value." Maximal Drawdown — "difference in deposit currency between the highest local equity value and the next lowest equity value." Relative Drawdown — the same kind of peak-to-trough fall, expressed as a percentage of the peak it fell from rather than in currency.
Absolute drawdown
How far below the initial deposit, specifically, the balance ever fell — not from any later peak, from the literal starting number. This is exactly why it so often reads zero on a genuinely profitable account: once the balance climbs above its starting point and never falls back below that original line again, absolute drawdown has nothing left to measure, no matter how sharp a real pullback happened later from a higher peak.
Maximal drawdown
The largest peak-to-trough fall found anywhere in the closed-trade balance history, reported in account currency, with a percentage shown in brackets alongside it. Unlike absolute drawdown, this one is genuinely measuring risk taken along the way, from whatever peak the account happened to reach before its worst subsequent fall.
Relative drawdown
The same kind of largest peak-to-trough fall, but reported as a percentage of the peak it fell from, with the currency amount shown in brackets. MetaQuotes computes maximal and relative independently of each other — one scan for the largest currency fall, a separate scan for the largest percentage fall — so on some balance histories the two figures describe two different peak-to-trough pairs, not necessarily the same dip reported in two units. This is exactly the detail that confuses people, and it is also the detail the 2012-era forum threads that still rank for this query get wrong most often.
Worked example
A clearly hypothetical 10-point balance path, invented to show the arithmetic, starting from a $10,000 initial deposit:
| Point | Balance | Running peak | Note |
|---|---|---|---|
| 1 | $10,000 | $10,000 | Initial deposit |
| 2 | $11,000 | $11,000 | New peak |
| 3 | $10,700 | $11,000 | Small pullback |
| 4 | $10,850 | $11,000 | Partial recovery |
| 5 | $12,400 | $12,400 | New peak |
| 6 | $11,800 | $12,400 | Pulling back |
| 7 | $12,100 | $12,400 | Partial recovery |
| 8 | $10,900 | $12,400 | The worst point |
| 9 | $11,400 | $12,400 | Recovering |
| 10 | $11,900 | $12,400 | End of period |
Absolute drawdown: $0. The balance never once fell below its $10,000 starting point. Maximal drawdown: $1,500, from the $12,400 peak at point 5 down to $10,900 at point 8. Relative drawdown: 12.1% ($1,500 ÷ $12,400), which in this particular path happens to come from that exact same peak-to-trough pair — worth stressing precisely because that isn't guaranteed on every path, only observed on this one. An account with a $0 absolute drawdown fell $1,500, over 12% from its own high, along the way — the number that gets quoted first is the one that says the least here.
Balance drawdown vs equity drawdown
MT4's maximal and relative figures are both balance-based: computed from closed trades only. An intraday equity dip on a position that was open at the time, however deep, simply doesn't appear in either figure unless the position actually closed while underwater. MT5's own reports go further, printing Balance Drawdown Absolute, Maximal and Relative alongside a separate Equity Drawdown figure that does follow floating, unrealised losses on open positions — the same balance-vs-equity split covered for prop-firm daily limits in the reset-time piece, and for maximum-loss floors in the trailing drawdown piece, applied here to the platform's own printed statistics instead of a firm's specific rule set.
Why absolute drawdown gets quoted anyway
It sits first in the statistics block on most statements, and "absolute" sounds like it should be the most rigorous of the three, which is presumably why it's the one people reach for first when they haven't checked what it actually measures. In practice it's closer to a sanity check than a risk figure: a nonzero absolute drawdown tells you the account genuinely went underwater relative to its very first deposit at some point, which is worth knowing, but a zero reading tells you nothing at all about how rough the ride was afterward — as the worked example above shows directly, with a real $1,500, 12.1% fall sitting underneath a flat $0 absolute drawdown reading.
Why deposits and withdrawals wreck these numbers
A deposit landing mid-period raises the balance instantly, which can mask a real trading drawdown happening at the same time or manufacture the appearance of a recovery that was really just new money arriving. A withdrawal does the opposite, creating what looks like a drawdown with no losing trade behind it at all. Computing any of these three figures by hand from a raw balance column, without separating trading results from balance operations first, produces a number that describes your deposits and withdrawals as much as it describes your trading.
What prop firms measure instead
A funded-account rule set's own maximum-loss floor is typically equity-based rather than balance-based, and boundaried to a specific reset schedule rather than measured freely across the whole history the way MT4's own statement figures are — a genuinely different measurement again, covered in full in the pieces on trailing drawdown and the daily reset-time trap.
Which number to actually watch
Peak-to-trough on closed equity — maximal drawdown, in currency, read alongside its recovery factor (total profit divided by that same maximal drawdown) — is the more informative pairing than absolute drawdown alone for almost every purpose. The drawdown recovery calculator shows how much ground a given pullback actually costs you to make back, which recovery factor alone doesn't make as immediately concrete.
See your real peak-to-trough drawdown
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Questions
What's the difference between maximal and relative drawdown in MT4?
They describe the same peak-to-trough fall in two different units. Maximal drawdown is that fall in account currency; relative drawdown is the same fall expressed as a percentage of the peak it fell from. MetaQuotes computes the two independently — scanning separately for the largest currency fall and the largest percentage fall — so on some balance histories they can come from two different peak-to-trough pairs, not necessarily the same one.
Why is my absolute drawdown zero?
Absolute drawdown only measures how far the balance ever fell below the account's original starting deposit, specifically. If the balance never dropped below that original number — including on an account that has had real, sometimes significant pullbacks along the way, just never below where it started — absolute drawdown reads zero. It says almost nothing about a profitable account's actual risk.
Does MT4 drawdown include open trades?
MT4's own printed maximal and relative drawdown figures are balance-based, computed from closed trades only. An intraday equity dip on a position that was still open, however deep, doesn't appear in these two figures at all unless it was realised by the position actually closing.
Why doesn't my MT4 drawdown match what I remember?
Almost always one of two reasons: the dip you remember happened on an open position and never showed up in the closed-trade balance figures, or a deposit or withdrawal moved the balance in a way that created or masked an apparent drawdown that had nothing to do with your actual trading result.
How do deposits affect drawdown?
A deposit raises the balance the moment it lands, which can mask a real trading drawdown that was happening at the same time, or create the appearance of a recovery that was really just new money arriving. A withdrawal does the reverse — it can manufacture the appearance of a drawdown that wasn't caused by any losing trade. Either way, computing drawdown by hand from raw balance figures without separating out deposits and withdrawals first will produce a misleading number.
Absolute drawdown ·Maximum drawdown ·Balance vs equity ·Equity curve ·Recovery factor ·Drawdown recovery calculator ·MT4 statement analyzer ·MT5 report analyzer
The 10-point balance path above is invented to show the arithmetic. No specific "acceptable drawdown" benchmark is stated anywhere on this page. This is educational information about measuring your own trading, not financial advice. Trading carries risk of loss. Full risk disclaimer.