Maximum Drawdown
📉 What is Maximum Drawdown?
Maximum Drawdown (MDD) is the largest percentage decline your bankroll has suffered from a peak to a trough, before reaching a new peak. It's the most important metric to evaluate the real risk of your strategy.
Maximum Drawdown = Largest drop between a peak and a trough
Practical example:
- Bankroll reached a peak of $2,000
- Dropped to $1,200 (40% decline)
- Then rose to $2,500 (new peak)
- The maximum drawdown of this sequence was 40%
📊 Visual Example of Maximum Drawdown
Chart illustrating the concept of maximum drawdown:
Maximum drawdown: 54.5% (drop from $2,200 to $1,000)
Recovery time: 3 periods
🧮 Maximum Drawdown Calculator
Enter your bankroll value sequence to calculate maximum drawdown:
⭐ Why is Maximum Drawdown Important?
Shows the largest loss your strategy has suffered. It's the worst moment for your bankroll.
Knowing your maximum drawdown helps you prepare for difficult times and not give up.
Strategies with maximum drawdown above 30-40% are considered very risky.
Helps determine the minimum bankroll size to withstand the worst-case scenario.
📊 Maximum Drawdown by Stake Size
Expected maximum drawdown for different stake sizes (95% confidence):
👤 Maximum Drawdown by Bettor Profile
🎮 Maximum Drawdown Simulator
Simulate the impact of consecutive losses on maximum drawdown:
🛡️ How to Reduce Maximum Drawdown
🎯 Acceptable Maximum Drawdown
🏆 Conclusion
Maximum Drawdown is the most important metric to evaluate your strategy's risk:
- ✅ The smaller the maximum drawdown, the safer the strategy
- ✅ Maximum drawdown above 30% is considered risky
- ✅ Smaller stakes = smaller maximum drawdown
- ✅ Use maximum drawdown to define your bankroll size