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Equity curve

Also called: Balance curve · Account curve

Equity curve — Your account balance plotted against time — the single chart that shows how a result was arrived at rather than what it was.

Every summary metric compresses a period into one number and throws the order away. The equity curve is the one view that keeps it, which is why two accounts with identical statistics can look completely different here — and why the one that looks worse is often the one to worry about.

In plain English

Take your starting balance, add each closed trade in the order it closed, and plot the running total. That is an equity curve. It is the most information-dense chart in trading analytics and also the one most often glanced at rather than read.

The endpoint is the least interesting part of it. Two accounts can both finish up 15% for the year: one climbing steadily with shallow dips, the other flat for eight months, down 30% in the ninth, and rescued by two enormous trades in the tenth. Profit factor, win rate and net P&L can be nearly identical. The second account is far more likely to be destroyed by next year, and the only place that shows is the shape.

What you are reading for is the shape of the failures. How deep do the dips go, how long do they last, do they arrive in clusters, and is the recovery from each one gradual or a single vertical jump. A vertical jump is usually a position that was too large, and it counts as a warning even when it is a profitable one.

The formula

Worked example — the demo account

The bundled demo account: 96 closed trades from 6 January 2025 to 9 April 2025, opening at $25,000.00.

A curve that ends +$4,293.45 higher than it started, having been $3,005.56 below its own high-water mark at the worst point.

The endpoint says the period was profitable. The drawdown figure says the route was not comfortable, and the two together are a much more useful description than either alone. Green on 31 of 51 days is a little under three in five, which is the texture behind the headline.

The question the curve answers that no table can: was the profit made steadily, or was it made twice and given back once? Look at where the line is flat, where it is steep, and whether the steep parts are wins or losses. Steep in both directions usually means position sizing that changes with confidence rather than with account size.

Every figure above is from the demo account TapeSheet ships with — 96 closed trades, generated from a fixed seed. Open the same account →

What this does not tell you

The caveat is the part worth reading. Most tools put it in a footer, if they print it at all.

• It is a BALANCE curve, not a true equity curve. It is built from closed trades, because a statement contains nothing else. Where an open position went before it closed is invisible: a trade that ran 400 against you and closed 50 up contributes +50 and the 400 never happened. Your real equity curve was rougher, and possibly much rougher.
• Nothing about position size. A smooth curve built at 5% risk per trade is not safer than a jagged one built at 0.5% — it is a smaller sample of a much more dangerous process. Read it beside drawdown and beside what you actually risked.
• Nothing about whether it continues. A rising curve is a description of the past, and the visual pull of extrapolating the line is very strong and completely unjustified. This is the single most common misuse of the chart.
• Deposits look exactly like profits unless they are marked. A curve that climbs because money was wired in is not a curve that climbed because trades worked, and any chart that does not distinguish them is misleading by construction.

Where TapeSheet shows it

The main chart on the Overview, plotted against time, with drawdown shaded underneath it and balance operations marked as separate points rather than folded into the line. Hovering a point names the trade or the deposit behind it.

Questions

Related terms

• Maximum drawdown — The largest fall from a peak in your account to the lowest point that followed it, before a new peak was made.
• Recovery factor — Net profit divided by maximum drawdown — how many times over the account earned back its own worst fall.
• Balance vs equity — Balance counts only closed trades; equity adds the floating profit and loss on everything still open. The gap between them is what a statement cannot show you.
• Profit factor — Gross profit divided by gross loss — how many currency units you made for every one you lost.

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