What is Drawdown Calculator
The Drawdown Calculator helps traders understand the potential impact of consecutive losses on their account balance. By simulating a series of losing trades, you can visualize how drawdown affects your capital and adjust your risk management strategy accordingly.
Understanding Drawdown in Trading
Drawdown represents the decline in your account balance from its peak value to its lowest point before a new peak is established. It is one of the most critical risk metrics in trading because it measures both financial loss and psychological stress. Understanding drawdown helps traders set realistic expectations and develop robust risk management strategies.
Key Drawdown Management Principles
- Capital Preservation - Limit losses to protect your trading capital
- Risk Per Trade - Never risk more than 1-2% of account per trade
- Recovery Planning - Understand the mathematics of recovery from losses
- Psychological Preparation - Prepare for inevitable losing streaks
- Continuous Monitoring - Track drawdown as a key performance metric
Input Parameters
Drawdown Simulation Results
Enter your parameters above and click Calculate Drawdown to see results
💡 Risk Management Tip: To survive drawdown periods, professional traders typically risk no more than 1-2% of their account per trade.
Frequently Asked Questions
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