Forex Drawdown Calculator
Instructions
Input
- Starting balance Enter the initial investment amount, for example, $1,000.
- Consecutive losses Simulate the scenario of N consecutive losses. Take 6 consecutive losses as an example.
- Loss % per trade Enter the percentage loss per trade, for example, 2%.
Result
- Total Loss Display the total loss percentage after facing consecutive losing trades.
- Ending balance Display the account balance after facing consecutive losing trades.
What is Max Drawdown (MDD)?
Max Drawdown (MDD) refers to the maximum loss suffered due to trading activities since the establishment of the trading record. Drawdown is calculated based on the difference in net value, so the Drawdown Calculator includes both settled and unsettled orders. If the maximum Drawdown (MDD) is large, it indicates that the risk of capital loss is also large.(MDD)If it is large, it indicates that the risk of capital loss is also large.
How is drawdown calculated ?
Drawdown measures the single continuous loss from a high point to a low point. Simply put, drawdown refers to the continuation from a high point to a low point, until a new high point appears.
Drawdown calculator is considered one of the most important risk calculators in the trader’s toolbox. One of the features of our drawdown calculator is that it allows traders to accurately simulate the ideal net value and risk percentage of each trade.
Using this calculator can also help traders avoid reaching an uncomfortable drawdown percentage, which could ultimately expose the account’s net value to the risk of total loss. For instance, even if 7% of capital is used per trade, 10 consecutive losses could deplete more than 50% of the initial capital in the account.
We recommend that traders always use this drawdown calculator before opening a trading position, and integrate it with any sound capital management system or account net value risk management plan.