Drawdown recovery calculator
Losses and gains are not symmetric. Lose 10% and you need 11.1% to get back; lose 50% and you need 100%. This calculator makes that asymmetry concrete for any peak and trough.
It is the single most useful piece of arithmetic for evaluating a strategy's risk: whatever a track record's average return, the maximum drawdown tells you what holding it actually felt like — and what recovery required.
- Drawdown
- 15.00%
- Gain needed to recover
- 17.65%
Recovery is always harder than the fall: a 20% drawdown needs a 25% gain; a 50% drawdown needs 100%. This asymmetry is the core argument for small per-trade risk.
How it works
Drawdown % = (peak − trough) ÷ peak × 100.
Required recovery % = (peak − trough) ÷ trough × 100.
The recovery percentage is always larger than the drawdown percentage, and the gap grows brutally: at 75% drawdown the account must quadruple just to break even.
Common questions
What is a "normal" drawdown for an automated strategy?
There is no normal — but there is honest and dishonest. Every real strategy has drawdowns, and a track record whose curve only rises either hasn't traded long enough or is hiding risk (for example, martingale-style sizing that banks small wins until one large loss). Judge strategies by their worst drawdown, not their best month.
Is drawdown measured on balance or equity?
Equity — including open positions. Balance only changes when trades close, so balance-based drawdown can hide large open losses. Equity drawdown reflects what the account holder actually lived through.
How does per-trade risk relate to maximum drawdown?
Losing streaks compound per-trade risk into drawdown. At 1% risk, a 10-loss streak produces roughly a 9.6% drawdown; at 3%, roughly 26%. Since streak lengths are a matter of when rather than if, per-trade risk is effectively a choice of maximum drawdown.
The thinking behind this tool is covered in Lesson 03: Risk management before anything else.
Related terms
- Drawdown — The decline from an account's peak value to its subsequent low — the number that measures how painful a strategy is to hold.
- Equity curve — The plot of account value over time — including open positions — that shows a strategy's character at a glance.
- Risk per trade — The fraction of account equity a single trade can lose if its stop loss is hit.
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