Drawdown Recovery Calculator
The math that should scare you into risk management.
Input a drawdown percentage. This tool returns the exact gain percentage you'd need to climb back to breakeven. The numbers are deliberately brutal — a 50% loss requires a 100% gain to recover, not 50%. This is why position sizing exists.
A 20% loss requires a 25.0% gain to get back to breakeven. This is not a typo. Math is asymmetric — losses hurt more than equivalent gains help.
If you start with $10,000 and take a 20% drawdown, your account drops to $8000. To get back to $10,000 you need to turn that into a 1.25x — a +25.0% gain on the reduced balance.
The asymmetry table
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What it is
Drawdown is the peak-to-trough decline in account equity. Recovery math is asymmetric because percent gains and losses are calculated on different bases: a 50% loss takes your $10,000 account to $5,000, and then a 50% gain on $5,000 only gets you to $7,500 — not back to $10,000. You'd need a 100% gain on the reduced balance. This calculator makes that truth unavoidable.
When to use it
Every time you're tempted to increase position size. Every time a strategy tells you 'just accept bigger drawdowns for bigger returns.' Every time you think a 30% drawdown is 'not that bad.' This tool exists to keep your ego out of your sizing decisions.
The formula
Recovery gain % = Drawdown % ÷ (100% − Drawdown %) × 100 Examples: 10% drawdown → needs 11.1% gain 20% drawdown → needs 25.0% gain 30% drawdown → needs 42.9% gain 40% drawdown → needs 66.7% gain 50% drawdown → needs 100.0% gain 70% drawdown → needs 233.3% gain 90% drawdown → needs 900.0% gain The bigger the drawdown, the more punishing the recovery.
How to use it
- 1. Input the drawdown you're modeling
Either a historical drawdown from your actual trading, or a hypothetical you're considering (e.g. 'what if I blow up 20% on the next FOMC?').
- 2. Read the recovery gain required
This is the % gain on the REMAINING balance you need to get back to your prior peak. A 20% drawdown needs a 25% gain on the reduced balance, not a 20% gain.
- 3. Convert to real dollars for emotional impact
If your account was $10,000 and you drew down 40%, you need to turn $6,000 into $10,000. That's a $4,000 gain on a smaller account — the mountain just got taller.
- 4. Use this to set max daily/weekly drawdown limits
Set hard stops: 'I will stop trading for the month if I hit 10% drawdown.' Pros use 3-5% as a daily kill switch and 10% as a monthly one. The math above shows why.
Common mistakes
- ✗Assuming a 30% drawdown 'only' needs a 30% gain. It doesn't — it needs 42.9%. The asymmetry is the point of this calculator.
- ✗Increasing size to 'make back' a drawdown faster. This is revenge trading dressed up in math. The correct response to a drawdown is to SIZE DOWN until the system works again.
- ✗Not tracking drawdown at all. If you don't know your worst drawdown, you don't know your real risk. Log it every month.
- ✗Focusing on peak balance instead of realistic compounding. A strategy that averages 5% monthly but suffers a 40% drawdown is NOT a 5% monthly strategy — it's a dead strategy.