What Is Drawdown? Measuring the Pain of a Losing Stretch
Drawdown is how far your account has fallen from its highest point. Max drawdown is the worst such fall — the single best gauge of how much heat a system makes you take.
Drawdown is the drop from a peak in your equity to a later low, before a new peak is made. It answers a simple, brutal question: how far down am I from my best-ever balance?
Drawdown = (peak equity − current equity) ÷ peak equity × 100
The three numbers Tracktions shows
- Max drawdown — the largest peak-to-trough fall in your history. This is the worst-case pain the system has put you through.
- Current drawdown — how far below your most recent peak you are right now. Zero means you are at a fresh high.
- Drawdown duration — how long you have been stuck below the old peak, in days or trades. Long droughts test discipline as much as money.
A worked example
| Point | Equity | Drawdown |
|---|---|---|
| Peak | ₹1,00,000 | 0% |
| Trough | ₹82,000 | −18% |
| Recovery | ₹1,00,000 | 0% |
The −18% is the max drawdown of this stretch. If you are still at ₹82,000, that is also your current drawdown.
Why it matters
- Survival first — a deep drawdown can end an account or a trader's nerve before the edge has time to pay off. Controlling it is what keeps you in the game.
- It shapes position sizing — smaller, consistent risk per trade keeps the worst stretch survivable. The position size calculator helps you cap risk per trade.
- Pair it with Calmar — Calmar divides return by max drawdown to show whether the reward justified the pain.
Educational content only. Tracktions is a trade-journaling and analytics tool, not investment advice — we are not SEBI-registered advisers and do not provide trade recommendations, tips, or assurances of returns.