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Equity & Drawdown Path

New Lab

See how returns compound alongside equity drawdowns. Automatically derives sizing recommendations.

How to use this Equity and Drawdown Path Tool

Input starting capital, win rate, risk-reward ratio, risk per trade, and total trades. Simulates random equity curves and plots drawdown depth to show the emotional pressure of trading path variance.

Configuration

0.5R Edge (Fixed)
Win Rate (%)
Drawdown Cap (%)
Simulation Seed

Equity Progression

Cumulative Path

Drawdown Path

Portfolio Risk
Educational Use Only

Educational only. Not financial advice. Results are simplified estimates based on the inputs you provide. They do not include brokerage, taxes, slippage, liquidity, bid-ask spread, margin rules, dividends, early exercise, exchange-specific contract rules, or emotional execution mistakes. Use this as a learning and planning tool, not as a trade recommendation.

Equity & Drawdown Path Guide

This tool simulates a single random 200-trade sequence to visualize how equity grows and falls over time. It maintains a constant 0.5R system edge, isolating the effect of win rate and position sizing on your actual experience.

How to use this tool

  1. 1Enter your account capital to see cash risk implications.
  2. 2Select a win rate. The tool adjusts R:R so the system edge stays exactly at 0.5R.
  3. 3Set your maximum acceptable drawdown cap.
  4. 4Observe the difference between the Equity Progression (capital growth) and the Drawdown Path (how far you fall from peaks).
  5. 5Change the seed to see a completely different 200-trade reality with the exact same stats.

Key metrics

Safe Risk Size

The position sizing recommended to avoid breaching your drawdown cap.

How to use it: This is the most critical metric. Stick to this risk to survive normal losing streaks.

Peak Required Return

The percentage return required just to get back to breakeven after hitting the maximum drawdown.

How to use it: Drawdown recovery is non-linear. A 20% drawdown requires a 25% return to recover. A 50% drawdown requires a 100% return.

Capital at Risk

The rupee amount risked per trade based on the calculated safe risk size.

How to use it: Helps translate percentages into actual pain tolerance.

Formulas used

Drawdown Percentage

Drawdown = (Peak Equity − Current Equity) ÷ Peak Equity

Drawdown is always measured from the highest point your account has ever reached, not your starting capital.

Required Recovery Return

Recovery % = (Drawdown %) ÷ (1 − Drawdown %)

This proves why large drawdowns destroy accounts; math works against you during recovery.

Example

If you have a 40% win rate system, you will see choppy, volatile equity paths. The drawdown chart will frequently dip into deep red valleys. If you change to an 80% win rate (with lower R:R), the equity curve smooths out and drawdowns become shallow, even though both systems make the same amount of money on average.

Common mistakes to avoid

  • • Do not assume a 10% drawdown requires a 10% return to fix. It requires 11.1%.
  • • Do not confuse the single simulated path with a guaranteed future outcome.
  • • Do not look only at the Equity Progression. The Drawdown chart shows the emotional difficulty of the strategy.