What max drawdown means
A backtest records the position value at each point (coins held × price that day), tracks the running peak value, then measures how far the current value has fallen from that peak.
Drawdown = 1 − current value ÷ peak value; max drawdown is the largest drawdown over the whole period.
Formulas
1 − current value ÷ peak valuethe largest drawdown over the periodWorked example (recompute it yourself)
Suppose a backtest produces position values of 1,000 → 1,400 → 900 → 1,200 → 1,500:
Track the peak: 1,000 (drawdown 0) → 1,400 (peak, drawdown 0) → 900 (drawdown = 1 − 900 ÷ 1,400 ≈ 35.71%) → 1,200 (drawdown = 1 − 1,200 ÷ 1,400 ≈ 14.29%) → 1,500 (new high, drawdown 0).
The max drawdown over the period is 35.71%, reached at the moment the value was 900.
Notes
During DCA the total invested keeps growing, so the value series reflects both price moves and ongoing buys; the backtest page plots the value line and the invested line together.
Max drawdown describes the size of a swing, not the final P&L; early on, when the invested base is small, the percentage can look large, so read it alongside the invested amount.
Backtest results depend on the chosen window and frequency; past performance does not indicate future results.
FAQ
Is max drawdown the same as the final loss?
No. Max drawdown is the deepest fall during the period, while the final P&L compares the ending value with the total invested; a position can draw down deeply and still end positive.
Why can early DCA drawdowns look so large?
Because early on the total invested and the value base are small, so the same dollar swing is a larger percentage; as contributions accumulate the base grows and the percentage usually flattens.