Strategic Intelligence

Tools · Drawdown Tolerance Test
← Tools
Decision Sizing · Calculator

Drawdown Tolerance Test

Honest psychological-capacity test. Most position sizing is set by ambition. This tool reverse-engineers from your actual drawdown history. The position you can hold through panic compounds; the position you panic-sell loses both money AND the recovery that would have followed.

Inputs

Account size$
Proposed position size$
Historical drawdown for this asset class% loss
Worst drawdown in 30+ year history. S&P: -50%. Tech-heavy: -75%. Crypto: -85%.
Maximum drawdown YOU have actually held through% loss
Be brutally honest. Not what you THINK you'd hold. What you ACTUALLY did.
Time horizon for this positionyr
Average recovery timemonths
From bottom to new high in this asset class.
Verdict
Position fits your tolerance.
Recommended position: $107,142 (42.86%)
Worst-case drawdown 7.0% is below your demonstrated tolerance of 15%. You can hold this.

Scenario Analysis

Position as % of account20.00%
If asset drops 35% (historical worst)-$17,500
Account drawdown at that loss-7.00%
Within your tolerance
Months to recover at average recovery rate16 months
Position size that fits YOUR tolerance$107,142
Honest Read
Sized correctly relative to your demonstrated tolerance. Important caveat: tolerance can change. Health, family, career changes all reduce risk capacity. Re-test annually. The position you can hold today may be too large in 3 years.
Connected dossiers:Marks · Pandemic Playbook (cascade survival)