Risk Management
Forex Drawdown: How to Calculate Trading Drawdown
Drawdown measures how far an account has fallen from its highest point. It's a way to describe the size of a losing stretch, separate from whether the account is up or down overall.
4 min read
All account figures are illustrative examples.
Peak and trough
The peak is the highest equity reached before a decline. The trough is the lowest point before a new peak. Drawdown is measured between the two.
Drawdown = Peak − Trough Drawdown % = (Peak − Trough) ÷ Peak × 100 Gain needed to recover = Drawdown % ÷ (100 − Drawdown %) × 100
Example
Worked example
Account peaks at $12,000, falls to $9,600
- Drawdown = 12,000 − 9,600 = $2,400
- Drawdown % = 2,400 ÷ 12,000 = 20%
- Gain needed = 20 ÷ 80 = 25%
From $9,600, a 25% gain is needed to return to $12,000.
| Drawdown | Gain needed to recover |
|---|---|
| 10% | 11.1% |
| 20% | 25.0% |
| 30% | 42.9% |
| 50% | 100.0% |
Why measurements vary by method
- Equity vs balance: equity includes open positions; balance only closed trades. Equity drawdown is usually larger.
- Maximum drawdown: the largest peak-to-trough fall over a period.
- Relative vs absolute: some platforms measure from the starting deposit instead of the peak.
- Time window: results depend on the period you analyze.
When comparing drawdown figures, check which method each one uses.
How to use the calculator
- Open the Forex Drawdown Calculator.
- Enter peak equity and current or trough equity.
- Press Calculate to see drawdown in money and percent, and the gain needed to recover.
Run your own numbers
Measure drawdown from an account high and the gain needed to recover.
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