The recovery curve: why -50% needs +100%

Recovery is non-linear: small losses cheap, big losses brutal

Here's the math nobody teaches new traders. Lose 50% of your account, and you need a 100% gain to get back to even — not 50%. Why? Because percentages work on the current balance, not the starting balance. Your $500 account drops to $250. To get back to $500, you need to DOUBLE the $250. Doubling is a 100% gain. The formula: required gain = 1 / (1 − drawdown) − 1.

The full table is brutal. A 10% drawdown needs +11% to recover. 20% needs +25%. 33% needs +50%. 50% needs +100%. 75% needs +300%. 90% needs +900%. 99% needs +9,900%. As drawdowns deepen, the required gain explodes. That's why preserving capital is the most underrated skill in trading. Avoiding a 50% drawdown is not just slightly easier — it's exponentially easier — than recovering from one.

What this means for sizing. On a $500 account, a single bad trade risking $250 (50% of the account) means you need to DOUBLE the remaining $250 to break even. That's months of disciplined trading after one bad day. Now flip it: if you risk $10 per trade (2% of $500), even 10 losses in a row leave you at $400 — a 20% drawdown requiring only a 25% gain. Survivable. The smaller your per-trade risk, the smaller your worst-case drawdown, the easier your recovery, the longer you stay in the game.

Recap: required gain = 1 / (1 − drawdown) − 1. -20% needs +25%. -50% needs +100%. -90% needs +900%. The hole gets exponentially harder to climb. Cut losses small, stay in the game.