Example 1 — 5 losing trades at 2%
- Starting balance
- 10,000.00 USD
- Losing trades in a row
- 5
- Loss per trade
- 2%
Ending balance = 10,000.00 × (1 − 0.02)^5 ≈ $9,039.21. Recovering to break even needs a 10.63% gain from there.
Drawdown Calculator
A 50% loss needs a 100% gain just to get back to even, and that math gets worse the longer a losing streak runs. See how a string of consecutive losses shrinks a starting balance, trade by trade, in USD and Thai baht (THB).
- Free
- No data stored
- Formula shown
Ending balance after 10 periods
8,170.73USD
≈ 266,855.98 THB
- Total loss (USD)
- 1,829.27
- Total loss (THB)
- 59,744.02
- Total loss (%)
- 18.29
- Gain needed to recover (%)
- 22.39
| Period | Starting balance | Ending balance | Total loss | Total loss (%) |
|---|---|---|---|---|
| 1 | 10,000.00 | 9,800.00 | 200.00 | 2.00 |
| 2 | 9,800.00 | 9,604.00 | 396.00 | 3.96 |
| 3 | 9,604.00 | 9,411.92 | 588.08 | 5.88 |
| 4 | 9,411.92 | 9,223.68 | 776.32 | 7.76 |
| 5 | 9,223.68 | 9,039.21 | 960.79 | 9.61 |
| 6 | 9,039.21 | 8,858.42 | 1,141.58 | 11.42 |
| 7 | 8,858.42 | 8,681.26 | 1,318.74 | 13.19 |
| 8 | 8,681.26 | 8,507.63 | 1,492.37 | 14.92 |
| 9 | 8,507.63 | 8,337.48 | 1,662.52 | 16.63 |
| 10 | 8,337.48 | 8,170.73 | 1,829.27 | 18.29 |
Worked examples
Try it with real numbers
Example 2 — 10 losing trades at 10%
- Starting balance
- 1,000.00 USD
- Losing trades in a row
- 10
- Loss per trade
- 10%
Ending balance = 1,000.00 × (1 − 0.10)^10 ≈ $348.68, a 65.13% loss. Getting back to 1,000.00 now needs a 186.80% gain.
The formula
How to calculate a drawdown
Ending balance after n losses = starting balance × (1 − loss per trade ÷ 100)^n
Total loss = starting balance − ending balance
Gain needed to recover = (starting balance ÷ ending balance − 1) × 100
Total loss = starting balance − ending balance
Gain needed to recover = (starting balance ÷ ending balance − 1) × 100
What each variable means:
- Starting balance — The account balance before the losing streak begins.
- n — The number of losing trades in a row, entered as periods.
- Loss per trade — The percentage of the current balance lost on each trade, applied to a shrinking balance each time, not the original one.
- Gain needed to recover — The percentage gain, measured from the new lower balance, required to climb back to the starting balance.
Because each loss is taken as a percentage of a smaller and smaller balance, the dollar loss shrinks with every trade even while the percentage stays fixed. The gain needed to recover, on the other hand, grows faster than the drawdown itself, which is the core reason a losing streak is more dangerous than it first looks.
What is a drawdown
A drawdown is the drop from an account's highest balance to a lower point reached afterward, usually shown as a percentage. It can come from a single bad trade or, more commonly, from several losing trades in a row while a strategy goes through a rough stretch. Traders track drawdown because it shows the worst dip they actually lived through, not just an average result.
Why a 50% loss needs a 100% gain
Percentage losses and percentage gains aren't symmetric, because each one is measured against a different balance. Losing 50% of a 10,000 USD account leaves 5,000 USD. Getting back to 10,000 USD from 5,000 USD requires a 100% gain, not another 50%, since the base you're gaining from is now half the size. The deeper the drawdown, the more lopsided this math becomes, which is why professional traders cap the risk on any single trade well before a losing streak can do this kind of damage.
How to use this before you set a risk per trade
Run a realistic losing streak through this calculator before you decide how much to risk per trade, not after. A string of 10 losses at 2% risk each brings a balance down by only about 18–20%, which still leaves a clear path back. The same 10 losses at 10% risk each nearly wipes the account out. Pair this with the Compounding Calculator to see the other side: what a steady run of gains, instead of losses, can do to the same balance.
FAQ
Frequently asked questions
Why does the gain needed to recover grow faster than the loss itself
A loss shrinks the balance you're measuring against, so the same dollar amount you need to win back is now a larger percentage of a smaller number. A 20% loss needs a 25% gain to recover, and a 50% loss needs a full 100% gain, even though the dollar loss and the dollar recovery are identical.
Does this loss per trade apply to the original balance or the shrinking one
It applies to the current balance at each step, not the original one. That's why the dollar amount of each successive loss gets smaller even though the percentage stays the same, and it's also why this tool uses compounding math rather than simple subtraction.
Is this the same as the maximum drawdown shown in a backtest
The idea is the same, a drop from a peak balance, but a backtest's maximum drawdown comes from real trade-by-trade results with mixed win and loss sizes. This tool models a simplified, uniform losing streak so you can see the shape of the math clearly, not to reproduce any specific strategy's history.
Why enter losing trades in a row instead of a calendar period like a week or month
Losing streaks don't follow a calendar, they follow trades. Counting by trades lets you test a realistic worst case, such as 8 or 10 losses in a row, regardless of how long that streak takes to play out.
Why does the USD/THB rate only affect some of the numbers
The exchange rate only converts the USD result into THB so it's easier to judge against an account funded in THB. The percentages, being ratios, stay exactly the same in either currency.
Next steps
Related tools and lessons
Risk of Ruin Calculator
Estimate the odds that a run of trades drags your account down to a loss level you set.
Example 45% win rate, 1.5 R:R, 2% risk, 100 trades = 12.13%
Open toolCompounding Calculator
Project how an account grows when each period's gain is reinvested.
Example $1,000 at 5% for 12 periods = $1,795.86
Open toolThese ideas come from Chapter 07: Risk and Money Management →