Forex Drawdown Calculator

Calculate peak-to-trough drawdown percentage and the recovery gain required to break even. Essential for prop firm challenge planning, risk management, and understanding the asymmetric relationship between losses and recovery.

Formula

Two formulas (simple mode)

Drawdown % Drawdown % = (Peak − Trough) ÷ Peak × 100
Recovery % Recovery % = (Peak − Trough) ÷ Trough × 100

Recovery % is always greater than Drawdown % — the smaller the surviving balance, the larger the percentage gain required to recover.

Worked Example

Given

Peak account value: $10,000 · Trough account value: $8,500

Drawdown Amount
$10,000 − $8,500 = $1,500
Drawdown %
$1,500 ÷ $10,000 × 100 = 15.00%
Recovery Needed %
$1,500 ÷ $8,500 × 100 = 17.65%

Note: to recover from 15% drawdown you need a 17.65% gain — not 15%.

Frequently Asked Questions

What is drawdown in forex trading?
Drawdown measures the peak-to-trough decline in account equity over a period. If your account grew to $12,000 then fell to $9,000 before recovering, the drawdown is ($12,000 − $9,000) ÷ $12,000 = 25%. It represents the worst loss experienced from any high-water mark — a key measure of strategy risk and trader psychology.
Why is recovery percentage always higher than drawdown percentage?
Because recovery is calculated from a smaller base (the trough), while drawdown is calculated from the larger peak. If you lose 50%, you need +100% to recover, not +50%. The formula: Recovery % = (Peak − Trough) ÷ Trough × 100. This asymmetry is one of the most important concepts in risk management — protecting your capital matters more than capturing upside.
What drawdown limits do prop firms use?
Most proprietary trading firm challenges have a maximum drawdown rule of 10% — both from initial balance and from high-water mark. The calculator warns you when your drawdown exceeds 10%. At that point, common challenges would be failed. Some firms use a daily drawdown limit of 5% as an additional constraint.
How should I use this calculator for risk planning?
Enter your current account peak value and your worst-case projected trough (e.g. after a losing streak). The calculator shows exactly how much drawdown that represents and how much you would need to gain to recover. Use this to set position-size limits: if you cannot afford more than 10% drawdown, size your positions so a full losing streak of N trades stays within that threshold.
What is maximum drawdown (MDD)?
Maximum drawdown is the largest peak-to-trough loss in an account's history. It is a single number that summarizes the worst historical risk a strategy has experienced. Hedge funds and prop firms use MDD as a key risk metric alongside the Sharpe ratio. The series mode of this calculator (coming soon) finds MDD automatically from an equity curve.