Usually only closed positions that are considered as a drawdown on performance charts, but it really depends on the context. Drawdown by equity for instance means that even open negative positions are considered - which is in my opinion is more important.
A drawdown is the reduction of one’s capital after a series of losing trades. This is normally calculated by getting the difference between a relative peak in capital minus a relative trough. Traders normally note this down as a percentage of their trading account.
A DRAWDOWN is a percentage of an account which could be lost in the case when there is a streak of losing trades. It is a measure of the largest loss that a trader's account can expect to have at any given moment or period of time.
