What Is Equity curve?

An equity curve is a graphical representation of the change in the value of a trading account over a time period.

Equity curves are used by traders to determine the viability of their trading strategies. A good equity curve has an even slope, small and short-lived drawdowns, and a good amount of trades to make the observation statistically significant.

Equity curve trading is a methodology where a trading strategy is turned on and off based on the performance of an equity curve, which is a plot showing the growth of capital over time from one specific trading strategy or portfolio.

See also