A drawdown is the fall in an account's value, or an investment's price, from a high point to the low that follows, usually shown as a percentage.
Your account rises from $100,000 to $120,000, then falls to $90,000 before it climbs again. The drawdown is the fall from the $120,000 high to the $90,000 low: $30,000, or 25% of the high. It is measured from the high, not from where you started.
To get back to $120,000 from $90,000, the account needs to rise $30,000, which is 33% of $90,000. A loss always needs a larger gain to recover: a 50% drawdown needs a 100% gain.
On Portfolio, Pro members get a Max drawdown figure: the largest fall from a high point of your account value to the low that followed, in percent, from your saved daily values. Pro's stress test on the Research page shows the largest daily loss and the largest 5-day loss your current holdings would have had over the past year. On every plan, the Performance history chart on Portfolio draws your account value over time, so you can see each fall and recovery.
Measuring from your starting balance. A drawdown runs from the highest value reached. An account that went from $100,000 to $120,000 and back to $105,000 is up overall but in a $15,000 drawdown.
Ignoring the recovery math. Getting back from a deep fall takes a much larger percentage gain than the fall itself, which is why many traders size positions to keep drawdowns small.
The largest drawdown over a period: the deepest fall from any high to the low that followed it. It is a common way to describe the worst stretch a strategy or account has been through.
Not quite. A loss is measured against what you paid. A drawdown is measured from the highest value reached, so you can be in a drawdown while still above your starting balance.
Divide the fall by what is left. A 20% fall needs a 25% gain, a 33% fall needs a 50% gain, and a 50% fall needs a 100% gain.
Common tools are smaller positions, a stop order on each trade, and a spread of holdings, so that no single loss takes a large share of the account.
Last updated: October 2026
Educational only. Not investment advice. JagSim is a simulator, not a broker.
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