Drawdown Calculator: Losses and the Recovery You Need

This free drawdown calculator shows what a losing streak does to your trading account. Enter your starting balance, the percent you risk on each losing trade, and the number of consecutive losses. The tool returns your final balance, the total drawdown from your starting point, and the recovery gain you would need to get back to break even. It also lists the balance after every single loss, so you can watch the damage build trade by trade. Everything runs in your browser.

What drawdown really measures

Drawdown is the drop from a peak in your account to the low that follows it. If your balance climbs to 12,000, then falls to 10,200, you are in a 15% drawdown. The measure is always taken from the highest point, not from your deposit. That detail matters. An account can sit above its starting balance and still be deep in drawdown from its own peak.

Maximum drawdown is the worst such drop over the whole history of the account. It is one of the most honest numbers in trading. Profit figures can hide luck and survivorship. Maximum drawdown shows exactly how much pain the account absorbed on the way. Two systems with the same return are not equal if one lost 12% at its worst point and the other lost 45%. The calculator above models the simplest driver of drawdown: a run of losing trades at a fixed risk percent.

Why a 50% loss needs a 100% gain

Losses and gains are not symmetric, because every recovery starts from a smaller base. Work through one example. Your account holds 10,000 and falls 50%, to 5,000. To get back to 10,000 you must now make 5,000 in profit. But you must make it with a 5,000 account. That is a 100% gain. The market does not care that you "only" lost half; the road back is twice as steep as the fall.

The formula behind the reference table above is simple: required recovery equals drawdown divided by what remains. Lose 20% and you keep 80%, so you need 20 ÷ 80 = 25% to break even. Lose 40% and you keep 60%, so you need 66.7%. The curve bends viciously past that point. A 70% drawdown demands a 233.3% gain, a feat most traders never achieve even once. This asymmetry is the single best argument for keeping risk small. Shallow drawdowns cost little to repair. Deep ones can end an account even after the losing stops.

How to use this drawdown calculator

1. Enter your starting balance. The default is 10,000, but any amount works.
2. Enter the percent of the account you risk on each losing trade. Use the risk figure from your trading plan, not your average loss in money terms.
3. Enter the number of consecutive losses to simulate, from 1 to 50.
4. Press Calculate. Read the final balance, the total drawdown, and the recovery gain needed. Then scan the per-loss table to see how fast the hole deepens.

The tool assumes you re-size every trade to the same percent of the current balance. That mirrors fixed-percent risk, the sizing method most retail traders use. It is also why the drawdown after ten 1% losses is 9.56% rather than a flat 10%: each loss is taken on a slightly smaller account than the one before.

How position sizing controls drawdown

Risk per trade is the throttle on drawdown, and small changes in it produce large changes in outcome. Run the same ten-loss streak at two settings. At 1% risk, a 10,000 account ends at 9,043.82. That is a 9.56% drawdown, repaired by a 10.57% gain. At 5% risk, the same ten losses leave 5,987.37. That is a 40.1% drawdown, and the account now needs a 67% gain just to break even. Same strategy, same streak, wildly different damage.

This is why sizing comes before entries. Use our position size calculator to turn your chosen risk percent and stop distance into an exact lot size for every trade. And take the stop placement itself from tested rules rather than guesswork; our library of MT4 trading systems spells out entries, stops, and exits for dozens of approaches. When every trade risks a fixed, small percent, the drawdown math above becomes a boundary you set in advance instead of a surprise you discover later.

Losing streaks are normal, so plan for them

A streak of losses is not proof that a strategy broke. Even a method that wins half its trades will hit four or five losses in a row again and again across a few hundred trades, and longer runs happen. The traders who survive are the ones whose risk per trade already assumed the streak would come. Decide now what drawdown you can tolerate, then set your risk percent so that a realistic streak stays inside that line.

It helps to look at the other side of the same math. The compounding that punishes losses also rewards disciplined gains, and our compounding calculator shows how modest returns stack when the account survives long enough to collect them. Survival is the entry fee. Keep drawdowns shallow, and time works for you instead of against you.

FAQ

What is a normal drawdown?

There is no universal number; it depends almost entirely on your risk per trade. At 1% risk, ten straight losses produce about a 9.6% drawdown. At 2% risk, the same streak produces about 18.3%, and at 5% it produces about 40%. Judge your drawdown against your own risk setting and realistic streak lengths, not against someone else's account.

What is the difference between equity drawdown and balance drawdown?

Balance drawdown counts only closed trades, so it updates each time a position is closed. Equity drawdown includes the floating profit or loss on open positions, so it moves tick by tick. Equity drawdown is the stricter and more honest measure: a large open loss is real risk even before you close it, and brokers use equity, not balance, for margin calls.

How do prop firms measure drawdown?

Most prop firms apply two limits at once. A daily loss limit, often 4% to 5% measured from the day's starting balance or equity, and a maximum overall drawdown, often around 10%. Many firms track these on equity, so floating losses count against you. Breaching either limit usually fails the account, which is why funded traders tend to risk well under 1% per trade.

Can this calculator predict my future drawdown?

No. It models one fixed scenario: a set number of consecutive losses at a constant risk percent. Real trading mixes wins and losses in sequences no one can forecast, and your worst future streak may be longer than any you have seen. Use the tool to stress-test your risk setting, not to forecast outcomes, because results are not guaranteed; past performance is not indicative of future results.

Related tools: atr position size calculator, risk reward calculator and breakeven calculator, plus the full free forex tools directory.