Drawdown Calculator is a simple tool designed to help you calculate your account balance decreases over time with consecutive losses.
So we know that risk management will make us money in the long run, but now we’d like to show you the other side of things.
What would happen if you didn’t use risk management rules?
Consider this example:
Let’s say you have $100,000 and you lose $50,000. What percentage of your account have you lost?
The answer is 50%.
This is what traders call a drawdown.
A drawdown is the reduction of one’s capital after a series of losing trades.
This is normally calculated by getting the difference between a relative peak in capital minus a relative trough.