Grid Drawdown Calculator
Grid trading and DCA strategies look attractive on paper — but what happens when every order fills? This calculator reveals the worst-case scenario: maximum capital exposure, true average entry price, and the painful drawdown when price hits your grid bottom.
Before deploying a grid strategy, understand exactly how much you're risking. Many traders underestimate total capital requirements and get liquidated when they run out of margin to average down.
Starting price / top of grid
Lowest price level in your grid
How many buy orders in the grid
Amount per order
Results
Maximum Drawdown
$281.23
Drawdown at Each Level
Shows cumulative drawdown as each grid level fills
Want these limits enforced automatically?
Jungle Rebounder helps execute structured strategies with hard caps.
See Jungle RebounderHow It Works
Calculation Methodology
This tool simulates a worst-case scenario where every grid order fills from top to bottom. Here's the step-by-step calculation:
The chart above shows how drawdown increases as each grid level fills. Notice how the drawdown accelerates as price drops further — this is because you're buying more units at lower prices, but the total cost keeps accumulating.
Learn more about grid strategies:
Grid strategies guideExample Scenario
Setup: Grid from $100 to $50, 10 orders of $100 each
What this means: If price drops to $50 and every order fills, you've deployed $1,000 but your position is only worth $750. You need a 33% bounce from $50 just to break even.
Common Mistakes & Warnings
- ⚠Underestimating capital: Many traders only plan for 3-5 orders but need 10+. Always calculate worst-case.
- ⚠Grid bottom too close: If your bottom is only 10-15% below entry, you'll hit it frequently. Consider 30-50% for volatile assets.
- ⚠Ignoring funding on perps: Funding rates can eat 1-3% per week. A grid that stays open for a month can lose 5-10% just to funding.
- ⚠No exit plan: Grids can tie up capital for weeks. Have a plan for when to close if price doesn't bounce.
Example Scenarios
Try these realistic scenarios to understand how grid drawdown works in different market conditions.
Scenario 1: Conservative Grid Strategy
A conservative approach with wide spacing and limited orders. Good for volatile assets where you want to catch larger swings.
Step-by-Step Calculation:
- Price range: $50,000 - $35,000 = $15,000
- Grid spacing: $15,000 ÷ 4 = $3,750 per level
- Total capital: 5 × $200 = $1,000
- Average entry: ~$42,500 (weighted by order prices)
- Drawdown at $35,000: ~17.6%
- Break-even from bottom: +21.4%
What this means: With only 5 orders and wide spacing, you need $1,000 capital. If price hits $35,000, you're down 17.6% but only need a 21.4% bounce to break even. This is a safer approach but may miss smaller bounces.
Scenario 2: Moderate Grid Strategy
Balanced approach with moderate spacing. Good for most market conditions and provides reasonable capital efficiency.
Step-by-Step Calculation:
- Price range: $100 - $50 = $50
- Grid spacing: $50 ÷ 9 = $5.56 per level
- Total capital: 10 × $100 = $1,000
- Average entry: ~$66.67 (weighted by order prices)
- Drawdown at $50: ~25%
- Break-even from bottom: +33.3%
What this means: This is the classic grid setup. With 10 orders, you deploy $1,000. If price hits $50, you're down 25% and need a 33% bounce to break even. This balances capital requirements with profit potential.
Scenario 3: Aggressive Grid Strategy
Dense grid with many orders and tight spacing. Catches more bounces but requires significant capital. ⚠️ High risk
Step-by-Step Calculation:
- Price range: $50,000 - $20,000 = $30,000
- Grid spacing: $30,000 ÷ 19 = $1,579 per level
- Total capital: 20 × $500 = $10,000
- Average entry: ~$35,000 (weighted by order prices)
- Drawdown at $20,000: ~42.9%
- Break-even from bottom: +75%
What this means: This aggressive setup requires $10,000 capital. If price drops to $20,000, you're down 42.9% and need a 75% bounce to break even. This is very risky and should only be used with strong conviction and sufficient capital buffer.
Edge Case Warning: If price breaks below $20,000, you have no more orders and are stuck with a 42.9%+ drawdown. Always set grid bottom well below expected support levels.
What If Variations
Explore how changing parameters affects your grid strategy:
What if I reduce order size by 50%?
Using Scenario 2: Total capital drops from $1,000 to $500, but drawdown % stays the same (~25%). You catch the same bounces with half the capital, but profit per bounce is also halved.
What if I double the number of orders?
Using Scenario 2: 20 orders instead of 10 means $2,000 capital, tighter spacing ($2.78 per level), lower average entry (~$58.33), but same 25% drawdown. You catch more bounces but need 2x capital.
What if price only drops 30% instead of 50%?
Using Scenario 2: If price stops at $70 instead of $50, only 6 orders fill. Capital deployed: $600, average entry: ~$85, drawdown: ~17.6%. Much better outcome, but you miss the opportunity to accumulate more at lower prices.
Frequently Asked Questions
What is grid trading?
Grid trading places buy orders at regular intervals below the current price. As price drops, you accumulate. When it bounces, you take profit on the accumulated position.
Why does average entry matter?
Your average entry determines your break-even point. Lower average entry means you need less of a bounce to break even — but it also means price had to drop further.
Should I use this for spot or perps?
Both, but perps have funding costs. Factor in a few weeks of funding rates if you expect the grid to stay open. Use the advanced options for rough funding estimates.
Related Tools
Grid Spacing Planner
Plan optimal grid spacing based on price range, number of orders, and optional volatility inputs.
Complements this tool
Grid Profit/Loss Simulator
Simulate P&L outcomes for grid trading strategies under different price paths. Calculate profit and loss for grid strategies across multiple scenarios.
Same category
Sequence Profitability Analyzer
Analyze profitability of averaging and grid sequences at different entry points. Find optimal entry zones and evaluate risk/reward ratios.
Same category