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Next: what the drawdown means for a whole strategy
Drawdown is one number. The drawdown guide shows how to read it with the win rate, payoff and time to recover.
What is included
- The calculator, with your own numbers
- The formula written out
- A worked example you can reproduce
- Where grid, martingale and DCA bots break the maths
Who it is for
- People running or testing a trading bot
- Anyone sizing a position or checking costs
- Readers learning how the numbers work
- Not advice, and not for placing trades
Key facts
- Drawdown = (peak - low) / peak. It is the fall from the highest balance to a later lower one.
- Gain needed to recover = peak / low - 1. A 50 percent drawdown needs a 100 percent gain, and a 90 percent drawdown needs 900 percent.
- Maximum drawdown is the worst fall in the whole record. Current drawdown is how far the balance is below its highest point now.
- Martingale and grid equity curves can look shallow for a long time and then fall by a very large amount in one stretch.
- The example balances on this page are made up. A real record needs the balance at every point, including open losses.
How the calculator works
Drawdown measures a fall from a high. It is always measured against the highest balance reached before the fall, not against where you started.
Dollar drawdown = peak - low
Gain needed to recover = peak / low - 1 = 1 / (1 - drawdown) - 1
The recovery formula is the important one. A loss is taken from the larger number, and a gain is applied to the smaller one, so the gain needed is always larger than the loss.
A worked example
Take a made-up account that reaches $10,000 and then falls to $6,000. The drawdown is (10,000 - 6,000) / 10,000 = 40.0 percent, or $4,000. To get back to $10,000 the $6,000 must grow by 10,000 / 6,000 - 1 = 66.7 percent. A gain of 40 percent would only reach $8,400.
Maximum drawdown and current drawdown
A record has many peaks and lows. The maximum drawdown is the worst fall from any peak to a later low. The current drawdown is how far the latest balance sits below the highest balance so far. The default balance list is 1,000, 1,100, 1,200, 1,050, 900, 1,000, 1,300, 1,250, 1,170, 1,400. The worst fall is from 1,200 (point 3) to 900 (point 5): (1,200 - 900) / 1,200 = 25.0 percent. The later fall from 1,300 to 1,170 is only 10 percent. The list ends at its highest balance, so the current drawdown is 0.0 percent.
The full recovery table
| Drawdown | Gain needed to recover |
|---|---|
| 10% | 11.1% |
| 20% | 25.0% |
| 30% | 42.9% |
| 40% | 66.7% |
| 50% | 100.0% |
| 60% | 150.0% |
| 70% | 233.3% |
| 80% | 400.0% |
| 90% | 900.0% |
Each row is 1 / (1 - drawdown) - 1, calculated by us on 27 Oct 2026, exact. The table is the same in every account. It does not depend on the market or the bot.
Where bots break the maths
Bots that win small and lose rarely produce an equity curve that looks calm, then breaks. The drawdown number is the one that shows it, but only if the record includes the break.
- Shallow until it is not. Take a made-up martingale-style record: the balance climbs by $10 for eleven steps, from $1,000 to $1,110, and then one losing sequence takes it to $300. The maximum drawdown is (1,110 - 300) / 1,110 = 73.0 percent, and the gain needed to recover is 1,110 / 300 - 1 = 270.0 percent. Eleven steps of gains of about 1 percent each did not matter. Read how martingale ladders fail.
- Open losses hide in the balance. A grid or averaging bot that holds losing positions does not show them in the balance until they close. Use equity, which includes floating profit and loss, when you list balances.
- Recovery needs time as well as percent. A bot that earns 1 percent a period needs 112 periods to gain 200 percent (1.01^112 = 3.04) if everything goes well. That is more than nine years of months.
- Ruin has no recovery. A balance of zero cannot grow. The calculator shows "cannot recover" for a low of zero. See the drawdown guide.
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FAQ
Frequently Asked Questions
What is a drawdown?
It is the fall in an account from a peak to a later low, as a percent of the peak. A balance that goes from $10,000 to $6,000 has a 40 percent drawdown.
Why does a 50 percent loss need a 100 percent gain?
Because the gain is applied to the smaller balance. A $10,000 account that loses half is at $5,000, and $5,000 has to double to get back to $10,000.
What is the difference between maximum and current drawdown?
Maximum drawdown is the worst fall in the whole record. Current drawdown is how far the balance sits below its highest point right now. The current one can be zero while the maximum is large.
Should I list balances or equity?
Equity, if you can. It includes open profit and loss. A balance-only record misses the floating losses a grid or averaging bot carries.
How many balances should I enter?
As many as you have, at an even spacing. A monthly list can hide a fall that happened and recovered inside a month.
Are the numbers on this page real?
Example numbers are made up to show how the maths works, and the page says so. A figure only counts as exact when the page says it was calculated on a stated date. Nothing you enter in a calculator leaves your browser.
Can I use this to decide whether to run a bot?
It can show whether a bot's numbers hold together and how much an account can lose. It cannot say what the market will do, and it is not advice. Use it to ask better questions, then read the terms of your own broker or exchange.
Is this financial advice?
No. It is a calculator and general education. It does not consider your situation, and its output is only as good as the numbers you enter.
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