In MetaTrader 5, traders look at numbers to know if a strategy is good. Two important numbers are maximum drawdown and recovery factor. These numbers help you understand risk and reward. So, if maximum drawdown is -0.98% and recovery factor is 43, what does it mean in MT5? Let’s explain it in a simple way.
What Is Maximum Drawdown?
Maximum drawdown shows how much the account dropped from its highest point. It’s the worst dip. If your account was at $100 and it fell to $99.02, that’s a -0.98% drawdown.
A drawdown of -0.98% is very small. That means the trading system did not lose much money even during the worst trades. This shows it is very safe. It keeps losses small and under control.
For traders, this is good news. A low drawdown means less stress. It also means you don’t need a huge profit just to get back to break-even.
A low drawdown is great news for traders. It means
- You’re not risking large amounts of money.
- You don’t have to recover from big losses.
- You feel less stress when trading.
In MetaTrader 5 (MT5), you can see the maximum drawdown in the backtest or strategy report. It’s an important number to check before trusting any trading strategy.
What Is Recovery Factor?
The recovery factor tells you how strong the strategy is after a loss. It is the total profit divided by the biggest drawdown.
A recovery factor of 43 is very high. It means the system made 43 times more money than it lost at its worst point. That’s powerful. Most good strategies have a recovery factor between 2 and 5. So 43 is amazing.
A high recovery factor means
- The strategy recovers quickly from any losses.
- It makes consistent, smart trades.
- It avoids taking big risks.
You can also find the recovery factor in the MT5 strategy report. It gives a quick snapshot of how well a strategy bounces back after losses.
What Does This Say About the Strategy?
So, again, if maximum drawdown is -0.98% and recovery factor is 43, what does it mean in MT5? It means the system is actually really strong and steady. It doesn’t lose much. And when it does lose, it makes that money back quickly, plus more.
This is the kind of strategy many traders want. It makes trading easier. You don’t really have to panic. You don’t even have to worry about big swings either. It’s just really great for both beginners and pros.
Why These Numbers Matter
Many people only look at profits. But risk is just as important. A system that makes $10,000 but loses $9,000 first is not safe.
That’s why drawdown and recovery factor are so useful. They show how a system behaves. They tell you if the system takes too much risk or if it plays smart.
Always check these numbers when looking at new strategies on MT5.
What Kind of Broker Should You Use?
If you use a system like this one, you want a broker that is reliable and fast. Many traders choose Defcofx because it supports MT5 and has no commissions or swap fees. Spreads start from 0.3 pips, which means cheaper trades.
Defcofx also gives high leverage up to 1:2000. That’s helpful when trying to grow small accounts. First-time users who deposit at least $1000 also get a 40% welcome bonus. And if you need to withdraw profits, the money is processed in 4 hours, even on weekends.
All of this helps traders use smart systems with better results.
FAQs
1. What is a good drawdown number in MT5?
Anything below 5% is good. Below 1% is excellent. It means small losses during bad trades.
2. What recovery factor should I look for?
A recovery factor of 2 or more is solid. A recovery factor of 43 means the system is very strong.
3. Can I trade this kind of system on Defcofx?
Yes. Defcofx supports MT5 and works well for systems with low drawdown and high recovery.
4. What if the drawdown is high but the profits are bigger?
It depends on your risk style. Big drawdowns mean more stress. Only use high-risk systems if you’re prepared.
5. I’m new to trading. Should I follow these numbers?
Yes. These numbers are simple ways to spot good systems. Start with a demo. Then use a small live account when ready.
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