Drawdown: What It Means

Drawdown measures how far an account fell from a peak before it recovered. If an account grows to $10,000 and drops to $7,000, the drawdown is 30%. Maximum drawdown is the largest such fall in the account's history.

It matters because it shows what you would have had to sit through to earn the profit. Always ask for equity drawdown, which includes open trades. Balance drawdown counts only closed trades and can hide large open losses.