CALCULATORS·PERFORMANCE

Drawdown is asymmetric.

A 50% drawdown needs a 100% gain to recover. See the full curve.

INPUTS

Drawdown

How far below peak. 20 = a 20% drawdown.

Starting balance (optional)

For the dollar example below.

TRY ONE

RESULT

Gain needed to recover25.0%

Account at trough$80,000

Back to peak$100,000

0% DD35% DD70% DD

ALSO USEFUL

Compounding

Starting capital, return rate, number of periods → final value and growth curve.

Kelly fraction

Optimal bet sizing: f* = W − (1 − W) / R. Most traders use a fraction of full Kelly.

HOW IT WORKS

Drawdowns hit symmetrically — gains compound back asymmetrically. The math: recovery = drawdown ÷ (1 − drawdown). A 10% drawdown needs 11.1% to get even. 20% needs 25%. 50% needs 100%. 80% needs 400%. This is the asymmetric tax compounding pays: each marginal point of drawdown costs disproportionately more to climb back. It's why "cut losers, ride winners" isn't folk wisdom — it's the only sustainable arithmetic.

Why recovery is asymmetric

Losses and gains are not symmetric because they act on different bases. A 50% loss takes $100 to $50; recovering means turning $50 back into $100, which is a 100% gain. The loss was measured against the larger number and the recovery against the smaller one, and that asymmetry compounds as drawdowns deepen.

The formula is recovery = 1 ÷ (1 − drawdown) − 1. It is close to linear for shallow drawdowns and turns vertical past about 40%, which is why the curve is worth looking at rather than the single number.

A worked example

A 20% drawdown needs 25% to recover — unpleasant but ordinary. A 40% drawdown needs 66.7%. A 60% drawdown needs 150%.

Notice that the second 20 points of drawdown cost far more than the first: going from 20% to 40% down roughly triples the required recovery. This is the practical argument for hard risk limits. The cost of a drawdown is not proportional to its size, so stopping one early is worth disproportionately more than it feels like at the time.

Where this calculator misleads you

The math is exact but it says nothing about time or psychology, which are what actually kill accounts. A trader who needs 66.7% to get back to even usually reaches for size to accelerate the recovery, and the increased risk deepens the hole. Most accounts are lost in the attempted recovery, not the original drawdown.

It also assumes the strategy still works. A drawdown caused by a genuine edge decaying is not a hole you trade out of — it is a signal to stop and re-measure. The curve implicitly assumes your expectancy is unchanged, which is precisely what a deep drawdown calls into question.

And it treats the drawdown as a single event. Real equity curves grind down over months in a series of small losses, which is harder to notice and harder to interrupt than one dramatic day.

Terms on this page

Drawdown: Peak-to-trough decline in account value, expressed as a percentage of the peak.
Max drawdown: The largest such decline over a period. The standard measure of a strategy's worst case.
Recovery factor: Gain required to return to the prior peak: 1 ÷ (1 − drawdown) − 1.
Risk of ruin: Probability of losing enough capital to be unable to continue. Rises sharply with position size.

FAQ

Why does a 50% drawdown need 100% to recover?

Multiplicative math. A 50% loss takes $1 to $0.50. Getting back to $1 requires doubling — a +100% return. The recovery curve is nonlinear: each marginal point of drawdown costs disproportionately more on the way back.

What's the practical maximum drawdown?

For active traders, 20% is rough but recoverable. 30%+ starts to break psychology. 50%+ is the wall — many traders close out emotionally before they ever make the math back.

Does this apply to all assets?

Yes — the math is universal. Stocks, options, crypto, a leveraged forex account: a 40% drawdown anywhere needs the same 66.7% gain to recover.

Done with the math?
Now log the trade.

Sutekka is the journal that tracks every trade you take. Free forever — no card.

Start logging — free