Losses compound asymmetrically — a 50% drawdown takes a 100% gain to recover. Enter your peak and current balance to see the drawdown, the gain required to break even, and a reference table for common drawdown depths.
Drawdown measures how far your account has fallen from its peak, as a percentage: (Peak − Current) ÷ Peak × 100. It's the standard way traders and fund managers quantify the worst loss an account has experienced from a high point, independent of the account's absolute size.
Recovering from a drawdown requires a larger percentage gain than the percentage lost, because the gain is calculated on a smaller remaining balance. The calculator derives this as: Recovery % = (Peak ÷ Current − 1) × 100 — for example, a 20% drawdown needs a 25% gain to recover, but a 50% drawdown needs a full 100% gain, and a 90% drawdown needs a 900% gain.
This asymmetry is the mathematical reason risk management focuses so heavily on limiting the size of individual losses: drawdowns don't just cost you money in the moment, they make the path back to break-even progressively steeper the deeper they go.
Worked example: an account that falls from a $10,000 peak to $8,000 has suffered a $2,000 loss — a 20% drawdown. But recovering it requires a 25% gain on the remaining $8,000 (10,000 ÷ 8,000 − 1 = 25%), not just 20%, because the recovery gain is calculated on a smaller base than the original loss.
Drawdown is the percentage decline in your account balance from its most recent peak to its current (or lowest) point. It's one of the most common ways to measure risk, because it captures the real, lived experience of losing money rather than just an average return.
Because percentage gains and losses are calculated on different balances. Losing 50% leaves you with half your capital, and gaining back to your original peak from that smaller base requires a 100% gain — the smaller your remaining balance, the larger the percentage needed to recover it.
It varies by strategy and risk tolerance, but many risk-managed traders and funds treat drawdowns beyond 20–25% as a serious warning sign, since recovery requirements start compounding sharply beyond that point.
The most direct levers are position sizing (risking a smaller percentage per trade), diversifying setups so losses aren't correlated, and having a rule to stop trading or reduce size after a defined losing streak, before a drawdown becomes severe enough to require an outsized recovery.
Drawdown is the current decline from the most recent peak at any point in time. Maximum drawdown (or 'max DD') is the single largest peak-to-trough decline an account has ever experienced over its entire history — a key statistic used to evaluate a strategy's worst-case risk.