Breakeven and Drawdown Calculator for traders

The Breakeven calculator is a useful tool for traders that are currently going through a drawdown.

By using it, the calculator will give you your exact current drawdown and the gains needed to breakeven.

Breakeven Point Calculator

What is the Breakeven calculator for?

You can use the breakeven calculator for forex, stocks, crypto, or any other markets.

The calculator works great to calculate your equity breakeven point.

It is also a good tool if you want to calculate individual coins or stocks drawdown.

I created the calculator to help traders understand the situation they are in.

Many new traders don’t realize how hard it can be to recoup our equity when they are in a drawdown. Getting back to breakeven can be a very hard task and sometime impossible.

Knowing and acknowledging our current situation as traders are crucial. Ignoring facts that are in front of us will probably only deteriorate the situation.

Here’s an example of different drawdowns and the gains needed to breakeven:

Drawdown vs Gain to Breakeven point

Drawdown Formula

Calculating your current drawdown percentage is pretty easy. You only need to know how much you started with and your current equity.

From there, we will apply this formula:

  • Starting equity: 10,500$
  • Current equity: 8,755$
(1 - (8755 / 10500)) X 100 = 16.619%
or
(1 - (Current equity / Starting equity)) X 100 = Current Drawdown

Breakeven Point Formula

To calculate the percentage of gains needed to break even, we will need to know our current drawdown value.

Keeping the same value as before, let’s say we are currently in a 16.619% drawdown.

This formula will tell us how much we will need to gain to breakeven:

(1 / (1 - 0.169)) - 1 = 0.203 or 20.3%
(1 / (1 - Current Drawdown)) - 1 

What is a Breakeven Point

The breakeven point refers to the point at which the cost of purchasing a financial instrument is equal to the revenue generated from selling it.

It’s a crucial concept in trading because it helps traders understand their profitability and risk levels.

Essentially, it’s the point where the profit and loss (P&L) statement of a trade equals zero, indicating that the trade has neither made nor lost any money.

What is a Drawdown

A drawdown is a reduction in the value of a trader’s account from its peak.

It refers to the percentage decline in the account balance from its highest point to its lowest point. It is created losses are incurred from unsuccessful trades or market volatility.

How to lower Drawdown

There are several ways to lower drawdowns and manage risk.

One approach is to use a stop-loss order, which is a tool that automatically closes a trade at a predetermined price level to limit losses.

Setting realistic trading goals and having a well-defined trading strategy. This can help traders make informed decisions and avoid impulsive trades.

It’s also important to monitor the markets regularly and adjust your trading strategies as necessary to adapt to changing market conditions.

Finally, managing your emotions and avoiding the temptation to chase after losses can help prevent large drawdowns and protect your trading capital.

Our position sizing calculator could help you manage your risk and lower your drawdown. By using strict trading risk management, your losses won’t impact you as much.

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