Benjamin Nathaniel A517 Williams#65

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What is equity curve in trading?

An equity curve is a visual representation of a trader’s account balance or equity over time. It shows how consistent and stable a trading strategy is. A steadily rising equity curve with manageable drawdowns indicates a robust system, while a volatile or downward-sloping curve suggests poor risk management or unreliable methods. Traders use equity curves to track performance, analyze losing streaks, and refine strategies. Equity curves are also helpful when evaluating automated trading systems or EAs. Consistency is more important than steep growth, as a smooth equity curve usually reflects disciplined trading and controlled risk.