Running several accounts at the same time? Each one may look fine on its own, but when you add up the total at the end of the month, that number might make your heart skip a beat. Every account may seem safe individually, but together they could be a ticking time bomb. Today, no fluff—let's talk directly about how to calculate and manage combined drawdown.
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Step 1: Add Up the Total First — Combine Multiple Account Equity into One Curve
[What to do]: Add up the real-time equity of all accounts and treat them as one big account.
[How to do it]: For the same moment t, add up the equity (including floating profit and loss) of all accounts:
E(t) = Account 1 Equity + Account 2 Equity + … + Account N Equity
Then track the historical high of this total equity:
Peak(t) = max( E(τ) | τ ≤ t )
Combined drawdown = (Peak − E) / Peak
Note that you must use real-time equity including floating profit and loss, not just realized cumulative profit and loss. Looking only at closed positions will miss the most dangerous moment when all accounts are in floating loss at the same time but have not yet cut losses.
[Completion standard]: You get a combined equity curve and the historical maximum drawdown (%) of this combination.
Step 2: Check Correlation — See Whether Accounts Rise and Fall Together
[What to do]: Calculate the correlation of daily returns between different accounts to judge the diversification effect of the portfolio.
[How to do it]: In a spreadsheet or Python, pull out the daily return series of each account and calculate the correlation coefficient matrix.
Correlation coefficient < 0.3: Good diversification. When one account falls, the other does not necessarily follow.
Correlation coefficient above 0.6: Basically the same strategy wearing a different mask. They rise and fall together, and the combined drawdown will not be much smaller than that of a single account.
Common reason for failure: Some people run three or four strategies at the same time and think that "different types are safe." Then they calculate the correlation and find that all of them are chasing rises and selling falls, losing money together in a ranging market. Correlation does not care about strategy names; it cares about whether the daily profit and loss directions are consistent.
[Completion standard]: You clearly know the rough range of correlation coefficients between your accounts.
Step 3: Adjust Position Sizes Using Combined Drawdown — Allocate Based on the "Worst Case," Not the "Best Single Account Case"
[What to do]: Reallocate the position size of each account based on the combined maximum drawdown, instead of managing each account separately.
[How to do it]:
First calculate the combined historical maximum drawdown (the result from Step 1).
Assume this maximum drawdown happens in the future and ask yourself one question: If the portfolio falls to this level, can I accept it?
If you cannot accept it, reduce the position size of each account proportionally until the combined maximum drawdown falls within your tolerable range.
For example, each of your three accounts has a drawdown of 12%, but the combined maximum drawdown comes out to 28%. In this case, do not look at "12% per account is safe." Instead, ask whether you can handle a 28% drop in the total account.
Risk warning: Liquidity in the crypto market can shrink sharply in extreme conditions. Do not assume you can sell more than 1% of daily trading volume in one day without affecting the price. When liquidity dries up, your actual drawdown may be much larger than the calculated value.
Step 4: Actively Isolate Accounts — Cut Off Risk Transmission at the Architecture Level
[What to do]: Use the platform's multi-account or sub-account features to isolate assets and prevent one strategy from dragging down the entire portfolio.
[How to do it]: Divide funds using a "core-satellite" structure:
Core account: Holds major assets for long-term holding, without frequent trading.
Trading account: Allocates a small amount of funds for high-volatility strategies, with an independent stop-loss line.
Reserve account: Keeps stablecoins as backup for capturing opportunities or adding to positions.
If a sub-account blows up because of a black swan event, the loss is limited to the money in that account, and core assets are not affected.
[Completion standard]: You have a clear account layering structure and know what risk each layer bears.
FAQ
Q: If multiple accounts trade the same type of instrument (for example, all BTC contracts), will the combined drawdown definitely be larger than that of a single account? A: Not necessarily. If the strategies go in opposite directions (one long and one short), part of the combined drawdown may be hedged. But if all strategies go in the same direction, drawdowns will stack up, and the combined drawdown may approach or even exceed the largest drawdown among all accounts.
Q: I only have two accounts. Do I still need to calculate this way? A: Yes. If the correlation between the two accounts is high (≥0.6), the combined drawdown may be larger than that of a single account. Pull three months of data and calculate the correlation coefficient. That is much safer than relying on gut feeling.
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Next Action
Today, open your trading records and pull out the daily equity of each account for the last three months. Do the simplest combined drawdown calculation:
Use the formula from Step 1 to calculate the combined equity curve and maximum drawdown.
If this maximum drawdown number makes you nervous — cut the position size of every account by 20% next month, run for another month, and see whether the combined drawdown comes down.
