Drawdown Calculator
Enter your account's peak value and current (trough) value to calculate your drawdown percentage and the return required to fully recover. The math is asymmetric — a 50% loss always requires a 100% gain to break even.
Enter your account's peak and current (trough) values, then click Calculate to see your drawdown percentage and the return needed to recover.
For educational purposes only. Not financial advice. Read full disclaimer
Drawdown Formulas
Drawdown % = (Peak − Trough) ÷ Peak × 100
Recovery % = (Peak ÷ Trough − 1) × 100
Dollar Loss = Peak − Trough
Recovery % is always larger than Drawdown % because you are recovering from a smaller base. This asymmetry is why limiting losses is critical.
Worked Examples
Example 1: 33% drawdown on a $100,000 account
Your account peaks at $100,000 and drops to $67,000 during a rough stretch.
- Dollar loss = $100,000 − $67,000 = $33,000
- Drawdown % = $33,000 ÷ $100,000 × 100 = 33%
- Recovery % = ($100,000 ÷ $67,000 − 1) × 100 = 49.3%
- You must gain nearly 50% from $67,000 just to reach $100,000 again.
Example 2: 50% drawdown — the common benchmark
A portfolio valued at $200,000 falls to $100,000 — cut in half during a bear market.
- Dollar loss = $200,000 − $100,000 = $100,000
- Drawdown % = $100,000 ÷ $200,000 × 100 = 50%
- Recovery % = ($200,000 ÷ $100,000 − 1) × 100 = 100%
- The portfolio must double from its low just to reach the previous high — illustrating how devastating a 50% drawdown truly is.
How to Use This Calculator
- Enter the peak value — the highest account or portfolio value before the drawdown began. Use your account high-water mark.
- Enter the trough value — the lowest point reached, or your current value if you are still in drawdown.
- Click Calculate — the calculator shows your drawdown percentage, the exact return needed to recover, and the dollar amount lost.
- Assess severity — drawdowns under 10% are mild, 10–25% are moderate, and anything above 25% requires significant recovery effort and emotional discipline.
- Use the result to inform risk limits — set maximum drawdown thresholds (e.g., 15–20%) that trigger a trading pause or strategy review.
Frequently Asked Questions
- Why is recovery % always larger than drawdown %?
- Because you are recovering from a smaller base. A 50% loss takes your $100 to $50. To get back to $100, you must gain 100% of $50 — not just another 50%. This compounding asymmetry is why risk management focuses on limiting losses first.
- What is an acceptable maximum drawdown?
- Professional traders and fund managers typically target a maximum drawdown (MDD) of 10–20%. Retail traders often experience 30–50% drawdowns, which are psychologically and mathematically very difficult to recover from. Setting a hard stop at 15–20% drawdown that triggers a strategy review is a sound discipline.
- What's the difference between drawdown and a losing streak?
- A losing streak counts consecutive losses in a row. A drawdown measures the peak-to-trough decline in your account value, regardless of whether those losses came consecutively or were mixed with smaller wins. Drawdown is a better measure of real capital at risk because it captures the compounded impact of losses.
- How do I reduce drawdown in my trading?
- The most effective methods are: limiting position size (risking 1–2% per trade), using hard stop losses on every trade, diversifying across uncorrelated setups, and reducing size or stopping trading entirely when drawdown exceeds a predetermined threshold. Kelly Criterion and risk of ruin calculations can also help optimize sizing.
- Can this calculator be used for individual stocks or just accounts?
- Yes — enter any peak and trough values: an overall account, a single stock position, a portfolio of ETFs, or even a business revenue figure. The drawdown and recovery math is identical regardless of the asset class.
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Learn how professionals manage and limit drawdowns. See the full risk management framework →