Does a small drawdown mean a strategy is safer?

Not on its own. NR7 volatility breakout has the smallest average maximum drawdown of the seven strategies compared here, negative 0.38 percent, and it is also the only one that lost money on average, negative 0.09 percent per ticker. A small drawdown means the strategy rarely fell far behind its own peak. It says nothing about whether the strategy made money.

Why does Williams %R reversal have such a deep drawdown?

The published study does not break down the cause, and this is not the place to guess at one rather than say so directly. What is published is the outcome: a negative 31.88 percent average maximum drawdown alongside the best average return of the seven strategies compared here, positive 27.21 percent. A deep drawdown and a strong return can come from the same strategy, which is the point this guide makes, not an explanation of the mechanism behind either number.

Guide · 6 min read

The smallest drawdown on this site also lost money

Sorted by average maximum drawdown, the safest-looking strategy on this site is also the only one of seven compared here that lost money, and the strategy with the deepest drawdown has the best return.

Updated 2026-09-04

Sort seven of Tenachine's published strategy studies by average maximum drawdown, smallest first, and NR7 volatility breakout comes out on top at negative 0.38 percent. It is also the only one of the seven that lost money, averaging negative 0.09 percent per ticker across ten years. The strategy with the deepest drawdown of the seven, Williams %R reversal at negative 31.88 percent, has the best return of the seven, positive 27.21 percent.

Average maximum drawdown, seven strategies, same 220-stock universe

Williams %R reversal's drawdown is more than eighty times NR7's. NR7 is the only strategy of the seven with a negative average return.

Return does not fall in the same order as drawdown. Tenachine's guide on reading a win rate already compares four of these seven strategies, NR7, golden cross, three weeks tight and Williams %R reversal, by win rate against return. Sorted by drawdown instead, the same four rearrange again: NR7 has the smallest drawdown and the only loss, three weeks tight sits in the middle of the drawdown ranking, and golden cross and Williams %R reversal both make money despite carrying two of the three largest drawdowns, Williams %R reversal's more than three times golden cross's on the exact same 220 stocks and the exact same ten years.

Objection one: seven strategies is not a lot of strategies

That is fair, and worth saying before anything else. Tenachine has published more strategy studies than the seven compared here; these seven are simply the ones with an average maximum drawdown already discussed on this site in earlier guides plus two, RSI mean reversion and gap down fade, added for this comparison. A pattern across seven is a real pattern, not proof, and a wider set of strategies could land differently. The direction here, smallest drawdown paired with the only loss and largest drawdown paired with the best return, is worth noting. It is not worth treating as a rule the next strategy has to follow.

Objection two: are these drawdowns even comparable

Each study measures average maximum drawdown per ticker inside its own backtest run, computed the same way across every study published here. What is not stated on any individual study page, and is worth being direct about rather than assuming past, is whether every strategy risks the same share of capital per trade. Tenachine's guide on sizing a position from a stop shows that turtle 55 breakout sizes each position so that hitting the stop costs exactly one percent of account equity. Whether NR7 volatility breakout or Williams %R reversal size positions the same way is not published anywhere on this site, and a strategy that risks less capital per trade will show a smaller drawdown for reasons that have nothing to do with the quality of its underlying signal. That is a real gap in what can be compared here, not a detail to wave past.

Objection three: an average drawdown still hides a range

Tenachine's guide on reading a return distribution makes this point about average return, and it applies to drawdown without changing a word of the argument: an average maximum drawdown across 214 completed tickers is one number standing in for 214 different worst-case paths. Some of Williams %R reversal's 214 tickers drew down far more than 31.88 percent on their way to the average, and some drew down far less. The average is a real, published figure. It is also not what any single position in the study actually lived through.

That does not erase the pattern across the seven strategies, it narrows what the pattern is allowed to claim. A small average drawdown on this site is not a stand-in for a safe strategy, and a large one is not a stand-in for a reckless one. NR7 volatility breakout's drawdown says it rarely fell far behind its own peak. It does not say the strategy made money, and the negative 0.09 percent return sitting next to that drawdown is the number that actually answers that question. Williams %R reversal drew down more than any other strategy compared here and still finished furthest ahead of all seven. Read the two numbers together, on this site and anywhere else a drawdown figure is reported by itself.