What is drawdown in trading?
Drawdown is the largest drop your capital has suffered before recovering. It shows how far your portfolio fell from a peak.
How do you calculate drawdown?
For example, if your portfolio falls from €10,000 to €7,000 before recovering:
Drawdown = (10,000 - 7,000) / 10,000 × 100 = 30%
How do you use this simulator?
- Enter your starting capital
- Enter the number of consecutive losing trades
- Enter the percentage lost per trade
You'll see your capital change and your total drawdown update straight away.
Why monitor your drawdown?
A large drawdown can:
- Quickly wipe out your capital
- Affect your trading psychology
- Make it harder to break even