Drawdown Recovery Calculator
Discover why a –50% drawdown requires a +100% gain to recover. The mathematics of losses is the most important concept in risk management.
A –50% drawdown requires a +100% gain just to break even. Capital preservation is not optional.
Why losses and gains are not symmetrical
Most traders think a 20% loss can be recovered with a 20% gain. It cannot. A 20% loss on a $10,000 account leaves you with $8,000. A 20% gain on $8,000 gives you $9,600 — still $400 short. To fully recover, you need a 25% gain. This asymmetry gets dramatically worse at higher drawdown levels.
The recovery formula
At –10% you need +11.1%. At –30% you need +42.9%. At –50% you need +100%. At –75% you need +300%. The deeper the drawdown, the harder — and longer — recovery becomes.
Time cost of recovery
Recovery does not just require a percentage gain. It requires time during which you cannot compound forward. A trader who loses 50% and then earns 10% monthly needs almost 8 months just to break even. Meanwhile, a trader who avoided the drawdown has compounded to nearly +115% over the same period.
Practical drawdown limits
- FTMO / prop firms: Typically 5% daily, 10% overall maximum drawdown.
- Retail traders (conservative): 15–20% maximum acceptable drawdown.
- Hedge funds: Many have hard stop policies at 15–20% drawdown.