Question 1

What It Shows

Accepted Answer

The equity curve plots your account balance (Y-axis) against time (X-axis): - **Starting point** — your initial deposit - **Each step** — balance change after each trade closes - **End point** — final account balance

Question 2

Ideal: Smooth Upward Slope

Accepted Answer

A consistent upward curve with small, brief pullbacks indicates a robust strategy that performs well across market conditions.

Question 3

Warning Signs

Accepted Answer

| Shape | Meaning | Action | |-------|---------|--------| | Sharp spikes up then crash | Overfitting or lucky streaks | Add more conditions, test longer period | | Long flat periods | Strategy rarely trades | Lower entry thresholds or use shorter timeframe | | Staircase pattern | Wins clustered, then nothing | Check if strategy only works in certain regimes | | Steady decline | Strategy is losing | Reconsider entry/exit logic | | One big spike | Single trade drives all profit | Not reliable — ne

Question 4

Drawdown Zones

Accepted Answer

Drawdown periods are highlighted on the chart: - **Red shading** below the equity curve shows drawdown depth - **Max Drawdown** — the deepest trough (most loss from a peak) - **Drawdown Duration** — how long it took to recover

Question 5

Drawdown Formula

Accepted Answer

``` Drawdown % = (Peak Balance - Current Balance) / Peak Balance × 100 ``` A max drawdown of 20% means the account lost 20% from its highest point before recovering.

Question 6

Consistency Check

Accepted Answer

Compare the equity curve's early, middle, and late periods: - **Similar slope throughout** — strategy is consistent - **Slope changes** — strategy may be sensitive to market regime changes - **Best at start, worst at end** — possible overfitting to early data

Question 7

Comparison with Benchmarks

Accepted Answer

A flat line at the deposit level would mean "do nothing." Your equity curve should meaningfully outperform this baseline to justify trading.

Question 8

Technical Details

Accepted Answer

- Balance updates at each **trade exit** (not entry) - The curve includes effects of commission and slippage - For grid/DCA strategies, balance updates when the entire position closes - Timestamps are in UTC > **Tip:** A strategy that returns +50% with a smooth curve and 10% max drawdown is generally better than one returning +100% with 40% max drawdown. Consistency matters more than peak returns.

Question 9

FAQ

Accepted Answer

**Q: Why does the equity curve look different from the trade log P&L total?** A: They should match. If you see differences, it's likely due to rounding in the visual display. **Q: Can I zoom into specific periods?** A: The TradingView chart in the Charts tab allows zooming and scrolling through the price data with trade markers.

Question 10