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Drawdown calculator

What a run of losses leaves of an account, and the gain on what remains that it takes to get back to level, which is always more than the loss.

Losses and the gains that undo them are not symmetrical, and the gap widens fast. Lose 10% and you need 11.1% back. Lose 50% and you need 100%.

This is the strongest argument there is for small position sizes, and it needs no persuasion: only arithmetic.

account ccy
%

Of the balance at the time, so each loss is smaller than the last in absolute terms.

trades

A strategy winning 60% of the time still loses 40%, and those losses cluster.

What is left$8,170.73
Drawdown
18.3%
Amount lost
$1,829.27
Gain needed to recover
22.4%
On what remains, not on what you started with.

A model, not a quote. Every figure here comes from what a broker publishes or what you type, and real fills, spreads and rates move.

The formula

Remaining
start × (1 − loss %) ^ number of losses
Drawdown
(start − remaining) ÷ start
Gain to recover
start ÷ remaining − 1

How to use it

  1. Enter the account as it standsNot what you hope it will be. The point of the exercise is the downside.
  2. Set the loss per trade to your actual risk limitIf you risk 1% per trade, enter 1. If you risk whatever feels right on the day, enter the largest of those.
  3. Be pessimistic about the streakTen consecutive losses is unusual, not impossible. A strategy that wins 60% of the time loses 40% of the time, and across hundreds of trades those losses arrive in clusters.
  4. Read the last rowThe gain needed to recover is the number that should decide your position size. If it is a figure your strategy has never produced, the risk per trade is too high.

The same ten losses at three position sizes

A $10,000 account losing 1% per trade, ten times running, ends at $9,044: down 9.6%, needing 10.6% to recover. Unpleasant and entirely survivable.

At 5% per trade the same ten losses leave $5,987: down 40%, needing 67% back. At 10% they leave $3,487, down 65%, needing 187%.

Same strategy, same ten trades, same market. The only variable was position size, and it is the difference between a bad month and an account that cannot mathematically recover.

This assumes each loss is the same percentage

Real losing streaks are uneven, and a stop that slips or a gap that jumps the level makes an individual loss larger than planned.

Treat the output as the best case for a given risk setting rather than the worst.

Common questions

Why is the recovery gain always larger than the loss?

Because it is calculated on a smaller base. Losing 50% of $10,000 leaves $5,000, and getting back to $10,000 from there is a 100% gain.

Is a 20% drawdown bad?

It needs 25% back, which is a substantial run for most strategies. Whether it is bad depends on whether your method has historically produced 25% inside a reasonable period.

Does this account for winning trades in between?

No. It models an uninterrupted run, which is the case worth planning for. Wins in between reduce the damage and do not change the arithmetic of the losses.

How many consecutive losses should I plan for?

More than you expect. A 60% win rate produces a run of five losses reasonably often across a few hundred trades, and a run of ten is not remarkable.

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