Free Drawdown Calculator: Calculator & Guide

What the Drawdown Calculator does

The Drawdown Calculator takes a small set of inputs and returns a single, well-defined result. It is intentionally narrow — broad calculators tend to hide the assumptions. By keeping the surface small, you can see exactly which input drives each part of the answer.

For Performance, the Drawdown Calculator is calibrated to the same defaults the TradingLens team uses when planning trades. Adjust the inputs to match your account, your instrument, and your risk tolerance.

How to use the Drawdown Calculator

1. Enter your entry

Type the price at which you intend to enter the trade. If you have not chosen an entry yet, mark the level you are watching on the chart and use that.

2. Enter your stop

The stop is the price at which the trade idea is invalidated. Be honest about this — the Drawdown Calculator will not save you from a poorly chosen stop.

3. Read the result

The result is the position size, the dollar risk, and the risk-percentage of your account. If any of those values look wrong, the inputs are wrong. Adjust them and re-run.

When to use the Drawdown Calculator

Use the Drawdown Calculator every time you are about to enter a trade, even if you have used it a hundred times before. The discipline of running the numbers before the click is what separates traders who survive from traders who do not.

Do not use the Drawdown Calculator to justify a position you have already decided to take. If the answer disagrees with the trade you wanted, the trade is the wrong size — or the trade is wrong.

The Drawdown Calculator is also useful before the entry, when you are still deciding whether a setup is worth taking. Plug in the planned entry and stop, and the result will tell you whether the risk is appropriate for the size of the move you are targeting.

Common mistakes with the Drawdown Calculator

The most common mistake with the Drawdown Calculator is rounding the stop to a "nicer" number. Every fraction of a percent in the stop changes the result, and rounding introduces silent risk. Use the actual stop from your chart.

The second most common mistake is forgetting to update the account size. The Drawdown Calculator measures risk as a percentage of the current account, not the account you opened with. If the percentage is creeping up, the position is too large.

The third is treating the result as a recommendation. The Drawdown Calculator is a calculator. The decision is yours.