Definition
What is drawdown in betting?
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Definition
Drawdown is the peak-to-trough decline in bankroll over a period. Maximum drawdown is the largest single decline; average drawdown is the typical depth of pullbacks.
Drawdown is the variance metric that matters operationally. A strategy with a real +2% edge can still drawdown 30% in a month due to variance. If your bankroll can't survive that drawdown emotionally or financially, the strategy will fail despite being correct. Glitch Edge ships per-strategy drawdown guardrails that halt placement when configured limits are breached.
Why guardrails matter
Drawdown can be a sign of variance (the strategy is fine, just unlucky) or a sign of broken assumptions (the model edge has decayed). You can’t tell from inside a single run. Guardrails stop placement at a pre-committed level so you can investigate before continuing.
Default config in Glitch Edge
- Max drawdown 25% halts the strategy automatically
- Operator must manually un-halt after review
- Drawdown is computed on paper P/L for paper-mode strategies, on live P/L for live-mode