Drawdown measures the dip in a bankroll from its last peak. Bankroll at €1,000, peak at €1,200, next trough at €900: absolute drawdown of €300, relative drawdown of 25% (calculated from the peak, not from the starting capital). Two strategies with the same final result can have gone through very different drawdowns — the final result never shows that path.
The essentials in a few seconds
Drawdown measures the dip in a bankroll from its last peak to its following trough. Borrowed from finance, it answers a question the final result never asks: what level of capital dip did it take to get there?
Two strategies with the same final result can have gone through completely different drawdowns. The final result never shows the path taken.
Peak, trough, and what a drawdown measures
A peak is the highest level a bankroll reaches at a given moment. A trough is the lowest level reached after that peak, before a new peak is passed. Drawdown measures the gap between the two.
The term comes from finance, where it describes the size of the dips a portfolio has gone through. Applied to a betting bankroll, it describes exactly the same thing: how much capital disappeared, temporarily or not, between the best moment and the worst moment that followed it.
Canonical example
Starting bankroll of €1,000. It climbs to €1,200 (the peak), then falls 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 point not to miss: relative drawdown is calculated from the peak, not from the starting capital. €300 relative to the €1,200 peak gives 25%, not 30% — the most common reading mistake on this topic is dividing by the starting bankroll instead. Whether the trough ends up above or below the starting capital is a separate question: a drawdown is measured from the peak regardless of what happens to the starting capital.
Absolute drawdown, relative drawdown, maximum drawdown
Three numbers, three readings. Absolute drawdown gives a concrete amount, useful for judging the real impact on a given budget. Relative drawdown relates that dip to the peak, which lets you compare bankrolls of different sizes. Maximum drawdown is the largest drawdown observed over the whole period studied — the one that put the capital under the most strain.
A record can show several successive drawdowns; only the deepest of them counts as the maximum drawdown.
The length of a drawdown and the recovery period
Two drawdowns of the same size don't weigh the same depending on how long they last. A 25% dip gone through in a week and a 25% dip spread over six months don't demand the same capacity to hold on, even if the final figure is identical.
The recovery period — the time needed to get back to the previous peak — is information distinct from the drawdown itself. A deep drawdown quickly made up and a moderate drawdown that drags on don't have the same impact on the rest of a betting activity.
Two paths, same finish line
Here's why drawdown deserves its own page: two paths can reach exactly the same final result while having gone through 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 |
| Lowest point reached along the way | €950 | €600 |
| Maximum drawdown | 5% | 45% |
Both paths finish at +€100. The second went through a 45% dip in capital before recovering — information that's completely invisible in the final result.
Drawdown — a dip measured from a peak, which can be recovered.Permanent loss — capital that never rebuilds, a notion distinct from a drawdown.Variance — the spread of results that, at the root, produces the dips a drawdown measures.
A drawdown is neither a prediction nor an anomaly: it's a measure, not a verdict.
Why ROI alone doesn't show this
The final ROI of a record says nothing about the path taken to reach it. The two paths in the example above show exactly the same final ROI, and yet radically different experiences for the person who lived through them.
Where these dips come from
A drawdown is a direct consequence of variance on capital committed. Understanding why results fluctuate — even when the decisions are good — explains why dips of this size stay normal over a sequence of uncertain decisions.
Why results fluctuate, even with good decisions →
What you can do with this measure
A drawdown is read, it can't be fully prevented. What's possible to control to limit its size — without ever cancelling it out — falls under risk management and capital organisation.
What you control, what you don't →
How the bankroll organises financial exposure →
Responsible gambling. A drawdown can represent a significant share of committed capital, whether temporary or not. A stake can be lost in full. Set a budget before you play and use the limit-setting or self-exclusion tools licensed operators provide. Learn more about responsible gambling.
Dig into the market
Odds movements are only part of the story. Here are the next topics to read.
Profitability and risk: the complete guide
The full picture: profit, ROI, expected value, variance, sample size, drawdown, risk.
Read the guideROI and yield: calculation and interpretation
Why the final result never shows the path taken.
Understand ROIVariance: why results swing
Where the dips that produce a drawdown come from.
Understand varianceRisk management: what can you actually control?
What you can do with this measure once the drawdown is identified.
Understand riskBankroll in sports betting
The capital a drawdown is measured against.
Understand bankrollFrequently asked questions
What is a drawdown in sports betting?
It's the dip in a bankroll measured from its highest point (the peak) to its following low (the trough). It's calculated in absolute value or as a percentage of the peak, never of the starting capital.
How do you calculate a drawdown?
Absolute drawdown = peak − trough. Relative drawdown = (peak − trough) ÷ peak. For a bankroll starting at €1,000, rising to €1,200 then falling back to €900, the absolute drawdown is €300 and the relative drawdown is 25%.
Why is drawdown calculated from the peak, not the starting capital?
Because it measures what was lost relative to the best point reached, not relative to the starting point. A bankroll that climbs to €1,200 then falls back to €1,000 still shows a drawdown, calculated from the €1,200 peak rather than from the starting capital.
Does a positive ROI mean a low drawdown?
No. Two records can reach the same final result through very different paths: one steady, the other having gone through a significant dip in capital before recovering. The final ROI never shows that difference.
Does a large drawdown mean a method is bad?
Not necessarily. A drawdown can come from the normal variance of a sequence of uncertain decisions. It signals a level of risk gone through, not automatically a flaw in the method.