Drawdown Calculator [Free Tool]
Measure how far your account falls from its peak and what that decline costs you. Understand the pain a strategy can inflict before you commit real capital to it.
Disclaimer: Trading financial instruments involves risk, and everything on this page is provided for educational purposes only. Nothing here is financial advice or a recommendation to buy or sell any instrument.
Final Balance
$9039.21
Total Drawdown
9.61%
How is this calculated?
Each loss reduces balance by loss%. Repeated over N consecutive losses.
Read the full user guide
Every parameter, formula, and worked example — a complete reference for this tool.
What is drawdown?
Drawdown measures the decline in equity from a peak to a trough — how much your account fell before it started climbing again. Maximum drawdown is the worst such decline in a record, and it matters enormously because it is the number that decides whether you can psychologically survive a strategy. A 60% annual return looks impressive, but if it came with a 45% drawdown, many traders would have abandoned it halfway down. This calculator turns a series of equity values into the drawdown picture, including the gain required to recover each new peak.
Key concepts
Peak-to-trough
The decline from the highest equity to the lowest point before recovery.
Max drawdown
The largest peak-to-trough decline in the series.
Recovery
The gain needed to return from a trough back to the previous peak.
A worked example with real numbers
- 1
Record the equity peak and trough
Your account peaked at $12,000, then fell to $9,600 before recovering.
- 2
Compute the decline
The drawdown is $12,000 − $9,600 = $2,400.
- 3
Express it as a percentage
$2,400 ÷ $12,000 = 20%, so the drawdown was 20% from peak to trough.
- 4
Calculate the recovery need
To climb from $9,600 back to $12,000 requires a 25% gain — the asymmetry that makes deep losses so expensive.
How to use it
Enter equity values
A sequence of account values over time.
Read max drawdown
The worst decline as an amount and percentage.
Plan recovery
See the gain required to get back to the peak.
The formula, step by step
Drawdown
Drawdown % = (Peak − Trough) ÷ Peak × 100%
Mistakes traders make
✗ Treating a historical max drawdown as the worst possible future loss
✓The next drawdown can always be deeper. Past drawdown is a guide, not a ceiling.
✗ Picking a strategy with a drawdown you would have abandoned halfway
✓If you cannot hold through the historical worst case, the strategy is not for you, regardless of its return.
✗ Confusing a single-trade loss with an account drawdown
✓A losing trade is one event; drawdown is the cumulative decline of the whole account across a series.
When this tool fits — and when it does not
Use it when
- ✓Before adopting any strategy, to see the pain you must be able to endure.
- ✓When sizing positions, since your risk budget must survive the expected drawdown.
- ✓When comparing strategies with similar returns but different risk profiles.
Skip it when
- ✗Judging drawdown from a period that only contains calm markets.
- ✗Assuming a small historical drawdown proves the strategy is safe.
- ✗Ignoring how long the account took to recover each peak.
Practical tips that actually help
Find your personal drawdown limit first
Decide the maximum decline you can hold through, then only take strategies whose history stays within it. The math is secondary to whether you can stay in.
Track both depth and duration
A shallow but six-month drawdown can be harder psychologically than a deep two-week one. Record both.
Size positions from drawdown, not just return
A strategy whose worst drawdown is 30% needs a smaller per-trade risk than one whose worst is 15% — let the pain number set the size.
Related & next steps
Frequently asked questions
Why does drawdown matter more than return for many traders?▾
A strategy can be profitable on paper but psychologically undoable if its drawdowns are too deep for you to hold through.
What is the difference between drawdown and max drawdown?▾
Drawdown is any single peak-to-trough decline measured at a point in time. Max drawdown is the largest of those declines across the whole record — the worst case the strategy has shown so far.
How do I know my drawdown tolerance?▾
A practical test is the sleep test: pick a hypothetical loss percentage and ask whether you could hold the strategy through it without abandoning the plan. Whatever number makes you uncomfortable is above your tolerance.
Why is percent drawdown not the same as percent loss?▾
They measure different things. A loss is the decline of a single trade or position; a drawdown is the decline of the whole account from its peak, which reflects a sequence of losses before full recovery.
Does a small max drawdown mean the strategy is safe?▾
Not necessarily. A short history or one that only covers calm markets can understate drawdown. Past drawdown is a guide, but the next one can always be deeper — which is why position sizing matters.
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Drawdown is a historical measure of an equity series, not a guarantee of future maximum loss.
Disclaimer: The tools and content on this site are provided for educational purposes only and do not constitute investment advice. Trading and investing involve a substantial risk of loss, and past performance does not guarantee future results.