Drawdown is how far a bankroll falls from its last peak. You start at £1,000, climb to £1,200, then drop to £900. That's an absolute drawdown of £300 and a relative drawdown of 25%. You divide by the peak, never by your starting capital. And two strategies with the same final result can hide drawdowns that look nothing alike.
Drawdown in two sentences
Drawdown measures how far a bankroll falls from its last peak to the trough that follows. The term comes from finance. It answers a question your final result never asks: how low did you have to go to get here?
Two strategies can end on the same result after drawdowns that look nothing alike. The final figure wipes out the route.
Peaks, troughs and the gap in between
The peak is the highest level your bankroll has reached at a given point. The trough is the lowest it hits afterwards, before it climbs back above that peak. The drawdown is the gap between the two.
In finance, it's used to describe the falls a portfolio goes through. On a betting bankroll, it describes exactly the same thing. How much money melted away between your best moment and the worst one that came after? Whether that loss turned out to be temporary or not.
A worked example
You start with £1,000. You climb to £1,200 (the peak), then drop back to £900 (the trough) before recovering.
| Step | Amount |
|---|---|
| Starting bankroll | £1,000 |
| Peak | £1,200 |
| Following trough | £900 |
| Absolute drawdown (peak − trough) | £300 |
| Relative drawdown ((peak − trough) ÷ peak) | 25% |
The classic trap sits in that last row. You divide by the peak, not by what you started with. £300 out of £1,200 is 25%. Divide by the original £1,000 and you'd get 30%, which is the mistake people make most often. Whether the trough lands above or below your starting pot is a different question. Drawdown always starts from the peak.
Absolute, relative, maximum
Three numbers, three jobs. Absolute drawdown gives you a concrete amount. Handy for seeing what the fall means for your budget. Relative drawdown sets that fall against the peak, so you can compare bankrolls of different sizes.
Then there's maximum drawdown. It's the biggest fall over the whole period you're looking at, the one that put your capital under the most strain. A record can go through several drawdowns in a row. Only the deepest one gets that title.
How long it lasts
Two drawdowns of the same size don't weigh the same if one drags on. Losing 25% in a week and losing 25% over six months take very different staying power. Yet the number's identical.
The time it takes to get back to the previous peak is called the recovery period. It's a separate piece of information. A deep drawdown that's quickly clawed back and a moderate one that drags on won't shape what comes next in the same way.
Two routes, one finish line
This is why drawdown gets its own page: two paths can end in the same place after very different levels of risk.
| Indicator | Path A | Path B |
|---|---|---|
| Starting bankroll | £1,000 | £1,000 |
| Final bankroll | £1,100 | £1,100 |
| Steady progression | Yes, no notable dip | No |
| Peak before the drop | £1,000 | £1,090 |
| Lowest point reached along the way | £950 | £600 |
| Maximum drawdown | 5% | 45% |
Both finish at +£100. Path B lost 45% of its capital before it recovered, and nothing in the final result gives that away.
The "lowest point" row is the one that says what the trip actually felt like: £950 on one side, £600 on the other.
A drawdown is a fall measured from a peak, and it can be recovered. A permanent loss is capital that never comes back. Variance is the spread of results that causes those falls in the first place.
A drawdown doesn't predict anything and isn't a sign that something's broken. It's a measurement, not a verdict.
What ROI doesn't show you
The final ROI on a record says nothing about how it got there. Paths A and B have exactly the same one. For whoever lived through them, though, they were two completely different experiences. In my own reading, the gap comes down to this: ROI answers "how much", while drawdown answers "at what cost along the way".
Where these dips come from
A drawdown is variance hitting money you've actually committed. Results swing, even when the decisions are good. Once you understand why, it's clear why falls this size are normal over a run of uncertain decisions.
Why results fluctuate, even with good decisions →
So what do you do with it?
You can read a drawdown. You can't fully prevent one. What you can control to limit how deep it goes (without ever making it vanish) comes down to risk management and how you organise your capital.
What you control, what you don't →
How the bankroll organises financial exposure →
Responsible gambling: a single dip can take a big bite out of your capital. Sports betting carries a risk of financial loss. Set yourself a budget, don't chase your losses, and use the deposit limits and self-exclusion tools available. Learn more about responsible gambling.
Put it into practice
Apply this guide to real odds.
See a market reading
A real match with its odds, movements and 0-100 signal.
Open the demoMargin calculator
Measure a bookmaker's margin on any market.
Calculate the marginDig into the market
Odds movements are only part of the story. Here are the next topics to read.
Profitability and risk: the complete guide
Profit, ROI, expected value, variance, sample size, drawdown and risk, all in one place.
Read the guideROI and yield: calculation and interpretation
The final number, and everything it leaves out about the route.
Understand ROIVariance: why results swing
Where the dips that a drawdown measures come from.
Understand varianceRisk management: what can you actually control?
Once you've spotted a drawdown, what you can do about it.
Understand riskBankroll in sports betting
The pot every drawdown is measured against.
Understand bankrollFrequently asked questions
What's a drawdown in sports betting?
It's the fall in a bankroll from its highest point (the peak) to the lowest point that follows (the trough). You express it as an amount or as a percentage of the peak. Never as a percentage of your starting capital.
How do you work out a drawdown?
Absolute drawdown = peak − trough. Relative drawdown = (peak − trough) ÷ peak. A £1,000 bankroll that rises to £1,200 and then falls back to £900 gives £300 absolute and 25% relative.
Why measure from the peak and not from the starting capital?
Because drawdown measures what you've given back since your best moment. A bankroll that climbs to £1,200 and slips back to £1,000 still shows a drawdown, measured from that £1,200 peak, even though it never went below where it started.
Does a positive ROI mean a small drawdown?
No. Two records can reach the same result by very different routes. One climbs steadily, the other dives before it recovers. The final ROI treats them as identical.
Is a big drawdown a sign of a bad method?
Not necessarily. A run of uncertain decisions produces dips, even when the decisions are sound. A drawdown tells you how much risk you went through. On its own, it doesn't prove you got anything wrong.
Sources & methodology
This page builds on the maths behind stake sizing (Kelly's formalisation, then Thorp's work on favourable games), which already describes how deep the capital dips of any variance-driven strategy can go. On top of that come OddScore's own odds-analysis method, the guidance published by the Gambling Commission and the support offered by BeGambleAware.
- Measure drawdown from the last peak reached, never from the starting capital.
- Keep absolute drawdown, an amount, separate from relative drawdown, a percentage of the peak.
- Read a large drawdown as a level of risk you went through, not as automatic proof of a flawed method.
- Leave the ways of limiting a drawdown to the dedicated risk-management page.