Equity Curve
An equity curve is a graphical representation of a trading account's value over time. It shows the growth (or decline) of capital as trades are executed. Analyzing equity curves helps traders evaluate strategy performance and consistency.
Understanding the Concept
• Smooth upward slope indicates consistent profitability • Jagged curves suggest high volatility in returns • Flat periods may indicate strategy isn't working in current conditions • Steep drops reveal significant drawdowns and risk events
Real-World Example
A trader backtests their strategy and plots the equity curve. It shows steady growth from $10,000 to $50,000 over two years with a maximum drawdown of 15%. The curve is smooth with no extended flat periods. This gives confidence the strategy has an edge worth trading with real capital.
How Strykr Helps
Strykr's AI assistant helps you understand and apply Equity Curve concepts to your trading. Get personalized guidance and real-time market analysis to make better decisions.
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