Drawdown percent and the gain needed to recover.
The drawdown calculator measures how far your trading account has fallen from its highest point, as a percentage, and the gain you need to get back to that peak. Enter your peak balance and current balance to see both. Recovery always takes a larger percentage than the fall, because you are growing a smaller balance.
Drawdown % = (peak − current) ÷ peak × 100
Gain to recover % = (peak ÷ current − 1) × 100
Your account peaked at 12,000 and is now 9,000.
The gap widens as the fall gets deeper:
Because recovery gets harder the deeper you fall, many traders cap their risk per trade and set a drawdown level at which they pause and review. If you risk 1% of your balance on each trade, ten losses in a row cost about 9.6%, which needs roughly a 10.6% gain to recover. Tracking drawdown in a trading journal also helps you spot when a strategy has stopped working.
To learn more, read our guides to risk management, prop firm challenges and trading psychology. To estimate how likely a losing streak is to reach your limit, try the risk of ruin calculator.
Because the gain is measured against the reduced balance. A 50% loss turns 10,000 into 5,000, and you then need to make 5,000 on 5,000, a 100% gain, to get back to where you started.
Maximum drawdown is the largest fall from a peak to a low before a new peak is made. Enter your highest balance and the lowest point that followed it to find yours. It is a common way to compare how bumpy different strategies or EAs have been.
Balance counts closed trades only. Equity includes the profit or loss on open trades, so it shows where you really stand right now. Prop firms often measure drawdown on equity, so use equity if you are working to their rules.
It depends on your strategy and how much risk you are comfortable with. Many traders set a personal limit and reduce their risk as they approach it. Prop firm challenges usually set their own daily and overall limits, so check the rules for yours.
Risk a smaller share of your account on each trade, avoid adding to losing positions, and cut your size after a run of losses. Smaller drawdowns are much easier to recover from, and easier to trade through calmly.