What is a good maximum drawdown for a trading account?

The arithmetic is unforgiving and asymmetric. A 20% drawdown needs a 25% gain to recover. 50% needs 100%. 80% needs 400%. This is why controlling drawdown matters more than maximising return — the deeper the hole, the less plausible the climb out.

Drawdown is also the number that decides whether you keep running a system. A strategy with a positive edge and a 40% drawdown is usually switched off somewhere in the middle of that decline, which converts a temporary loss into a permanent one. The tolerable drawdown is the one you will actually sit through, not the one you accept in advance.

For prop firm accounts the question has a hard answer rather than a preference. Most evaluations cap total drawdown around 10% and daily loss around 5%, and a breach ends the account regardless of how well it was going. See prop firm rules.

Reading a published drawdown figure

Check the period it covers. A 6% maximum drawdown over three quiet months means very little; the same figure across several years including a crisis means a great deal. Check whether it is measured on balance or equity — equity drawdown includes open losing positions and is the honest one.

And check deposit load alongside it. A low drawdown at high load is not safety, it is exposure that has not yet been tested.