Drawdown Calculator
See how consecutive losing trades erode your account and how much you need to recover.
| # | Loss | Balance | Drawdown |
|---|---|---|---|
| 1 | -$200.00 | $9800.00 | 2.0% |
| 2 | -$196.00 | $9604.00 | 4.0% |
| 3 | -$192.08 | $9411.92 | 5.9% |
| 4 | -$188.24 | $9223.68 | 7.8% |
| 5 | -$184.47 | $9039.21 | 9.6% |
| 6 | -$180.78 | $8858.42 | 11.4% |
| 7 | -$177.17 | $8681.26 | 13.2% |
| 8 | -$173.63 | $8507.63 | 14.9% |
| 9 | -$170.15 | $8337.48 | 16.6% |
| 10 | -$166.75 | $8170.73 | 18.3% |
Why Drawdown Matters
Drawdown measures the decline from a peak in your account balance. A 50% drawdown requires a 100% gain just to break even. This is why risk management — limiting how much you risk per trade — is critical to long-term survival.
At 2% risk per trade, 10 consecutive losses result in about 18% drawdown. At 5% risk, that same streak wipes nearly 40%. This calculator helps you see the impact before it happens.
Common questions
What is drawdown in trading?
Drawdown is the fall from an equity peak to the following trough, quoted as a percentage of the peak. Maximum drawdown is the worst such fall over the period, and it is the number that decides whether a strategy is actually tradeable by a human.
How much do I need to gain to recover a drawdown?
More than you lost, because the gain is calculated on a smaller balance. The formula is loss / (1 - loss): a 20% drawdown needs 25% to recover, a 33% drawdown needs 50%, and a 50% drawdown needs 100%. This asymmetry is the whole argument for position sizing.
How many losses in a row should I expect?
Longer streaks than most traders plan for. A strategy that wins 50% of the time will hit a run of seven losses roughly once every 128 trades, purely by chance. Sizing that survives only a four-loss streak is under-capitalised for its own win rate.
What is an acceptable maximum drawdown?
That is a tolerance question rather than a maths one, but the practical constraint is behavioural: most people abandon a system somewhere in the 20-30% range, usually at the worst possible moment. A backtest showing 40% drawdown is really a backtest of a strategy you would have quit.
Where we use this
Drawdown is where most strategies fail our quality gates. Two of our four real edges died on it.
We test strategies the hard way and publish every result. Get an email when one passes our gates.