Drawdown has applications in both investment/trading and banking. In trading or investment, drawdown refers to the reduction in equity capital. It is essentially the difference between the peak equity value that your account reached and the lowest equity level reached within a specified period. In the banking world, drawdown refers to the gradual access of part or eventually all of a line of credit. This means that in investment, drawdown determines your risk level, whereas, in banking, drawdown determines your level of liability.