About the Drawdown Calculator
Drawdown measures the decline from a previous peak to the current value of a trading account or investment portfolio. It is a common way to describe the depth of a losing period.
Because losses and gains are measured from different starting points, recovering from a drawdown takes a larger percentage gain than the percentage lost. A 50% drawdown, for example, needs a 100% gain to recover.
How It Works
The calculator subtracts your current balance from your previous peak to find the dollar drawdown, then divides by the peak to get the drawdown percentage. Recovery required divides the same dollar drawdown by your current balance, because any recovery has to be earned on the smaller balance.
Your starting balance is used to show your overall change since the beginning, which can be positive even while you are in a drawdown from a later peak.
- 10% drawdown → 11.11% gain to recover
- 25% drawdown → 33.33% gain to recover
- 50% drawdown → 100% gain to recover
- 75% drawdown → 300% gain to recover
Formula
Example
An account started at $10,000, climbed to $12,000, and is now worth $9,000.
Inputs
- Starting balance
- $10,000
- Previous peak
- $12,000
- Current balance
- $9,000
Results
- Dollar drawdown
- $3,000.00
- Drawdown
- 25.00%
- Recovery required
- 33.33%
- Change from start
- −10.00%
Understanding Your Results
- Drawdown: How far the account is below its previous peak, as a percentage of that peak.
- Recovery Required: The percentage gain on the current balance needed to return to the peak.
- Remaining Capital: The current balance as a share of the peak balance.
- Change from Starting Balance: Your overall gain or loss since the starting balance.