Maximum-Drawdown Reviews in Crypto: When the Common Rule Produces a Misleading Result
Drawdown measured on closed trades looks smaller than drawdown measured on open equity. The rule depends on which equity curve you use.
Short answer
Maximum drawdown computed from closed-trade equity ignores losses while trades are open. If a position was −$1,400 at its worst before recovering to close at −$200, closed-trade equity records −$200, but the account actually fell $1,400. Mark-to-market drawdown, using open P&L at each bar, is larger and closer to what you experienced and to margin risk. Report both, and use mark-to-market for leverage decisions.
Worked example
| Step | Value |
|---|---|
| Closed-trade drawdown | 8% (illustrative) |
| Mark-to-market drawdown | 14% |
| Worst open loss in a trade | $1,400 |
| Same trade closed at | −$200 |
| Use for leverage | Mark-to-market |
Which to use
| Purpose | Measure |
|---|---|
| Strategy comparison | Both, labelled |
| Leverage and margin | Mark-to-market |
| Psychology / tolerance | Mark-to-market |
Drawdown review example: Maximum-Drawdown Reviews: A Worked Crypto Example With Fees Included.
Conclusion
Related: Maximum-Drawdown Reviews: A Worked Crypto Example With Fees Included, Losing-Streak Planning in Crypto: When the Common Rule Produces a Misleading Result.
Plan the same calculation with ChartsPod's position planner.
Open the ChartsPod terminalMaximum drawdown computed from closed-trade equity ignores losses while trades are open.
Check Maximum-Drawdown Reviews in Crypto against a live market before relying on it.
Try it in ChartsPodQuestions readers ask
Why do drawdown figures differ?
Closed-trade vs mark-to-market equity.
Which is larger?
Mark-to-market.
Which for leverage?
Mark-to-market.
Sources and methodology
Arithmetic uses standard sizing formulas. Fee rates (0.05% taker, 0.02% maker), slippage and funding values are illustrative; check your venue's schedule. Liquidation figures are simplified approximations; exchanges calculate them with their own maintenance-margin rules (see Bybit's documentation).
- Bybit: Liquidation process — mark price and margin modes.
- ChartsPod: product overview, pricing and FAQ — free terminal, venues, modules, no order placement; checked 17 Oct 2026.
This article explains research tools and workflows. It is not financial advice, does not recommend buying or selling any asset and does not predict prices. Crypto derivatives carry a risk of rapid and total loss of margin.
CHARTSPOD EDITORIAL EDITION · RESEARCH AND EDUCATION ONLY · NOT FINANCIAL ADVICE.