Definition
Drawdown is the drop in a bankroll from its highest point to a later low point. It measures how far the bankroll fell before recovering or setting a new high.
Formula:
Drawdown % = (Peak Bankroll - Lowest Bankroll) / Peak Bankroll x 100
If a bankroll reaches $2,000 and later falls to $1,600, the drawdown is:
($2,000 - $1,600) / $2,000 x 100 = 20%
Worked Example
A bettor starts with $1,000 and grows the bankroll to $1,250 after a strong week. The next bets are all at -110 odds, risking $110 to win $100 each.
The bettor loses three straight -110 bets:
$1,250 - $110 - $110 - $110 = $920
The peak was $1,250. The low point is $920.
($1,250 - $920) / $1,250 x 100 = 26.4%
The bettor’s drawdown is 26.4%. Even though the original bankroll was $1,000, drawdown is measured from the peak, not the starting amount.
Why It Matters
Drawdown helps a bettor judge whether bet size is too large for the bankroll. It is useful when comparing staking plans, because two bettors can have the same record but very different bankroll swings.