Drawdown Calculator
Calculate how consecutive losing trades impact your account balance.
Drawdown Scenario
This shows why proper risk management (1-2% per trade) is crucial. Higher risk = faster account blowup.
Why Drawdown Matters
- Non-linear recovery – A 50% loss requires 100% gain to recover!
- Psychology – Deep drawdowns cause emotional trading and bigger losses.
- Risk 1-2% max – This limits drawdowns and keeps you in the game.
- Losing streaks happen – Even with 60% win rate, 5+ losses in a row will occur.
What is a Drawdown Calculator?
A drawdown calculator shows how consecutive losing trades impact your trading account. It demonstrates the non-linear relationship between losses and recovery—the deeper your drawdown, the harder it is to recover.
This is one of the most important risk management concepts. A 50% drawdown requires a 100% gain just to break even. This is why professional traders limit risk per trade to 1-2% of their account.
Key Features
- Consecutive loss simulation
- Compound drawdown calculation
- Recovery percentage needed
- Trades to recover estimation
- Visual drawdown demonstration
- Risk percentage impact analysis
Frequently Asked Questions
Drawdown is the peak-to-trough decline in your account balance during a losing period. It's expressed as a percentage: if your account drops from $10,000 to $8,000, that's a 20% drawdown.
Because math is asymmetric. If you lose 50% of $10,000, you have $5,000. To get back to $10,000, you need to gain $5,000—which is 100% of your current $5,000 balance. This is why capital preservation is crucial.
Most professional strategies aim for maximum drawdowns under 20-25%. Retail traders should target even lower. A 30%+ drawdown is psychologically and mathematically very difficult to recover from.
Risk 1-2% per trade maximum, use proper stop losses, diversify across uncorrelated strategies, and reduce position size during losing streaks. Also consider taking breaks when drawdown exceeds your comfort level.
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