Drawdown Calculator
Drawdown measures how far an account has fallen from its highest point — the single most-watched risk statistic for evaluating whether a strategy's losing streaks are survivable.
How do I calculate drawdown and recovery %?
Drawdown is the peak-to-current loss as a percentage of the peak. Recovery % is the gain needed from the current balance to get back to that same peak — and it is always a larger number than the drawdown itself.
A $10,000 account that falls to $7,500:
A 25% drawdown doesn't need a 25% gain to recover — it needs 33.3%, because that gain is measured against the smaller, post-loss balance, not the original one.
Why does recovering from a drawdown always need a bigger % gain than was lost?
The asymmetry gets dramatically worse as the drawdown deepens: a 10% drawdown needs an 11.1% gain to recover, a 50% drawdown needs a full 100% gain, and a 75% drawdown needs a 300% gain. This is the core mathematical reason deep drawdowns are so dangerous — recovery gets exponentially harder, not proportionally harder, as losses grow.
What's considered an acceptable maximum drawdown?
Many professional traders aim to keep maximum drawdown under 20%; proprietary trading firms are often stricter still, with daily limits of 5-10% and overall limits around 10-12%. Reducing position size per trade (commonly 1-2% of the account), enforcing hard stop losses, and diversifying across uncorrelated setups are the standard ways to keep drawdown inside a recoverable range.
How position size sets the depth of a losing streak
Take a $10,000 account that takes 8 losing trades in a row, each losing a fixed percentage of the balance at that moment. The only thing that changes between the three cases below is the risk per trade:
- 1% per trade: 0.99^8 = 0.922745, so the balance is $9,227.45, a drawdown of 7.7%, needing +8.4% to recover
- 3% per trade: 0.97^8 = 0.783743, so the balance is $7,837.43, a drawdown of 21.6%, needing +27.6% to recover
- 10% per trade: 0.90^8 = 0.430467, so the balance is $4,304.67, a drawdown of 57.0%, needing +132.3% to recover
Enter the starting balance as the peak and each ending balance as the current balance, and the calculator reproduces the same three results. A losing streak of identical length is routine at 1% and survivable at 3%, but it takes more than half the account at 10%.
The recovery table
Recovery needed equals the drawdown divided by what is left: Recovery = Drawdown / (1 - Drawdown). Some reference points:
- 10% drawdown needs +11.1%
- 20% drawdown needs +25.0%
- 30% drawdown needs +42.9%
- 40% drawdown needs +66.7%
- 50% drawdown needs +100.0%
- 75% drawdown needs +300.0%
The curve steepens fast after about 30%, which is why many traders set a hard stop-trading level well before it.
Measure from the latest peak, not the starting balance
The calculator compares one peak with one current figure. Over a longer history, find each peak and its following low, run the calculator for each pair, and keep the largest. Take an account that moves $10,000, $11,500, $10,350, $12,000 and $10,500:
The second dip started from a new peak of $12,000, so it is measured from there, not from $10,000 or $11,500. The account is still $500 above where it began, yet it has suffered a 12.5% drawdown.
Balance versus equity
Balance only changes when a trade closes. Equity includes floating profit and loss on open trades. With a peak of $10,000 and an open position currently down $600, equity is $9,400.
Enter equity as the current value if you want open trades to count. This is the stricter and usually more realistic measure.
Sizing a position to stay inside a limit
You can work backwards from a drawdown limit to a risk per trade. If you want an 8-trade losing streak to cost no more than 10%, you need (1 - r)^8 to stay at or above 0.90.
Rounded down to a whole risk setting, 1.3% covers an 8-loss streak and about 0.8% covers a 12-loss one. Longer streaks than you plan for are exactly how limits get breached.
Daily limits against maximum limits
Some programs apply both a daily and a maximum limit. On a $10,000 account, a 5% daily limit is $500. Three losing trades at 2% risk cost 0.98^3, which leaves $9,411.99 and a loss of $588.01, so the third loss breaches the daily limit even though the account is far from its maximum.
The same three losses at 1% risk leave 0.99^3 x $10,000 = $9,702.99, a loss of $297.01 and well inside the limit. Risk per trade decides how many losses fit in a day.
How long recovery takes
Recovery is also measured in time. A 20% drawdown needs +25%, and the time to earn that depends on your pace.
- At 2% a month: ln(1.25) / ln(1.02) = 11.3, so about 12 months
- At 5% a month: ln(1.25) / ln(1.05) = 4.6, so about 5 months
The faster pace is rarely the one you can count on after a loss, and traders who try to recover quickly often take larger risks and deepen the hole. Use the Compounding calculator to test what pace you would need.
Check this against your rules
Funded-account and prop-firm programs define drawdown in different ways: from the starting balance, from the highest balance or equity, or from the start of each day, and some count open trades while others do not. Read the exact rule and its measuring point before using any number from this page as a limit. To keep drawdown inside a limit, size trades with the Lot Size calculators, and see drawdown on Wikipedia for the general definition.
Conclusion
This calculator measures a single peak-to-trough move, not the full equity curve — a true "maximum drawdown" statistic tracks the worst such drop across an entire trading history. Use the single-drawdown figure here to reality-check any one losing stretch against your own risk tolerance. See the Lot Size / Position Size calculator and a full breakdown of drawdown recovery math.
Frequently asked questions
Does drawdown apply to a single trade or the whole account?
Drawdown as used here is an account-balance measure, not a single-trade result — it tracks the peak-to-current fall in overall equity, which can span many winning and losing trades.
How can I reduce drawdown risk going forward?
Limit position size per trade (commonly 1-2% of the account), always use a stop loss, and avoid increasing size to "win back" a recent loss — most account blowups come from a sequence of normal losses compounded by oversized bets, not one single catastrophic trade.
Does higher leverage cause bigger drawdowns?
Not by itself. Leverage sets the margin your broker requires and the largest position you may open, but drawdown comes from the position size you actually trade relative to your balance. One lot of EURUSD on a $10,000 account is worth $10.00 per pip at 1:30 or 1:500 leverage, so a 50-pip adverse move costs $500, a 5% drawdown, either way.
Is the drawdown here measured on balance or equity?
On whatever you enter as the current value. The calculator simply compares your peak with your current figure. Enter your equity to include floating losses on open trades, or your balance to count only closed ones.
What does a drawdown of 100% mean?
The account is at zero, so there is nothing left to recover from. This is why recovery is shown as not applicable when the current balance is zero, and why the drawdown limits traders set are far below 100%.