What is equity curve?

What it means

Two strategies with identical final returns can have completely different curves — one climbing steadily, the other making everything in two months and giving half back in between. The endpoint is the same and the experience of holding them is not remotely comparable.

Why it matters

What to look for is consistency of slope and the depth and duration of the flat or falling sections. A curve that spends nine months going sideways is describing a strategy most people would abandon before it worked, regardless of what the final figure says.

What this changes in practice

Beware of curves generated from cumulative backtest profit with no costs, no slippage and no position-sizing constraints. Those produce the smooth diagonal lines that appear in advertisements. A curve worth trusting is one drawn from realised results on a real account, and this is exactly why our published figures come with the strategy list and its record of what was cut.