Drawdown & Recovery Calculator
Plan your path back to break-even
"The more you lose, the harder it is to get back to where you started."
Required Profit to Recover
Recovery Cheat Sheet
Other Useful Tools
How the Drawdown & Recovery Calculator Works
Understanding Drawdown is critical for long-term survival in the markets. It shows you the 'hidden' difficulty of recovering after a losing streak.
The Formula
Practical Example
Frequently Asked Questions
1. What is Drawdown in Trading?
Drawdown refers to the decline from a peak to a trough in a trading account's value, expressed as a percentage. It measures the maximum loss since the last all-time high.
2. Why do I need more profit to recover than I lost?
This is due to the math of percentages. When you lose money, your capital base becomes smaller. For example, losing 50% of $100 leaves you with $50; to get back to $100, you must gain 100% of your remaining $50.
3. What is a 'Maximum Drawdown' (Max DD)?
Max Drawdown is the largest peak-to-trough decline before a new peak is achieved. It is a key indicator of the risk and stability of a trading strategy or Prop Firm performance.
4. How can I avoid deep drawdowns?
The best way is through strict risk management. Limiting risk per trade to 1-2% ensures that even a losing streak won't lead to a drawdown that is mathematically difficult to recover from.
5. What is considered a 'safe' drawdown level?
While it depends on the strategy, many professional traders and Prop Firms aim to keep drawdowns below 10-15%. Anything beyond 25% starts requiring significantly higher returns to recover.