Equity curve

An equity curve plots your balance after each trade or each day. Two traders can finish a month with the same profit and have completely different curves: one smooth and steadily rising, the other swinging through deep drawdowns before ending up. The curve shows that the second trader took far more risk for the same result.

What to look for:

• the overall slope — whether the method gains or loses over time;
• the depth and length of the dips;
• sudden steps, which often reveal one oversized trade or a day of tilt;
• changes in behaviour, such as a curve flattening out after a method stops working.

A common mistake is judging a method by a short, rising section. Over 50 trades almost anything can produce a nice-looking curve by luck. Another is ignoring what changed at the start of a strong run: a curve that steepened right after you raised your stakes may mostly be showing bigger stakes, not better trading.

You can build an equity curve from your Sky Trade trade history or your trading journal. Reviewing it weekly turns abstract numbers into a picture. See drawdown and recovery.