What is Drawdown?
Understand the fundamental concept to manage your bankroll risk
📊 Educational guide • Risk management
📉 Definition of Drawdown
Drawdown is the percentage reduction of your bankroll from its peak value. In other words, it's the decline your bankroll has suffered from the highest point it has ever reached.
Drawdown = (Peak Bankroll - Current Bankroll) / Peak Bankroll × 100%
Practical example:
- Your bankroll reached a peak of $1,500
- After some losses, your current bankroll is $1,050
- Drawdown = (1,500 - 1,050) / 1,500 × 100 = 30%
Important: Drawdown is measured from the peak, not from the initial value.
📊 Visual Example of Drawdown
Imagine your bankroll evolution over time:
Month 1: $1,000
Month 2: $1,200 ↑
Month 3: $1,500 (PEAK)
Month 4: $1,200 ↓
Month 5: $900 (40% Drawdown)
Month 6: $1,100 ↑
Month 7: $1,500 (Recovered)
Maximum drawdown: 40% (drop from $1,500 to $900)
Recovery time: 2 months
🧮 Drawdown Calculator
Calculate your current bankroll drawdown:
📉 Current drawdown:
0%
💰 Loss from peak:
$ 0.00
📈 Need to gain:
0%
📈 Impact of Drawdown on Recovery
The larger the drawdown, the harder the recovery:
Drawdown
Profit Needed
Difficulty
10%
+11.1%
Low
20%
+25%
Moderate
30%
+42.9%
High
40%
+66.7%
Very High
50%
+100%
Extreme
70%+
+233%+
Ruin
Conclusion: The larger the drawdown, the harder the recovery. Keep stakes low to avoid deep drawdowns.
📊 Types of Drawdown
📉 Maximum Drawdown: Largest decline ever recorded from the historical peak
📊 Current Drawdown: Current decline from the last peak
📈 Average Drawdown: Average of declines over a period
✅ Recovered Drawdown: Drawdown that has been fully recovered
👤 Acceptable Drawdown by Profile
🟢 Conservative
Drawdown: 10-15%
Stake: 1-2%
🟡 Moderate
Drawdown: 20-25%
Stake: 2-3%
🔴 Aggressive
Drawdown: 30-40%
Stake: 4-5%
📊 How to Calculate Drawdown
1
Record the peak value of your bankroll
2
Note your current bankroll value
3
Apply the formula:
(Peak - Current) / Peak × 1004
The result is your current drawdown
Practical example:
- Peak bankroll: $2,500
- Current bankroll: $1,750
- Calculation: (2,500 - 1,750) / 2,500 × 100 = 30% drawdown
🛡️ Tips to Manage Drawdown
1️⃣ Reduce your stake during drawdown
2️⃣ Don't increase stakes to "recover quickly"
3️⃣ Take breaks after significant drawdown
4️⃣ Review your bets to identify mistakes
5️⃣ Set a maximum acceptable drawdown (e.g., 30%)
🏆 Conclusion
Drawdown is an essential metric for any bettor:
- ✅ Drawdowns are normal and inevitable
- ✅ Smaller stakes = smaller drawdowns
- ✅ The larger the drawdown, the harder the recovery
- ✅ Set a maximum acceptable drawdown
For Educational Purposes Only: Drawdown is inevitable. Manage it with low stakes and discipline.