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 the percentage decline from your account peak to any trough. Understanding drawdown is critical because losses require disproportionately larger gains to recover.
This calculator helps you visualize how a series of losses impacts your account and demonstrates why professional traders emphasize protecting capital over maximizing gains.
Key Features
- Consecutive loss simulation
- Recovery percentage display
- Visual drawdown chart
- Risk percentage analysis
- Account balance projection
- Maximum drawdown tracking
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.
Math works against you. A 50% loss requires a 100% gain to break even. A 75% loss needs 300% gain. This asymmetry is why professionals never risk more than 1-2% per trade.
Most professional traders aim to keep maximum drawdown under 20%. Prop firms often have strict 5-10% daily drawdown limits. Beyond 30% drawdown, recovery becomes psychologically and mathematically very difficult.
Risk less per trade (1% vs 2%), use proper stop losses, avoid correlated positions that can all lose together, and take breaks after consecutive losses to prevent revenge trading.