DRAWDOWN RECOVERY
How much gain do you need to recover from a drawdown? The math is brutal.
Drawdown Recovery Table
| Drawdown | Recovery Needed | Severity |
|---|---|---|
| -5% | +5.3% | Low |
| -10% | +11.1% | Low |
| -15% | +17.6% | Moderate |
| -20% | +25.0% | Moderate |
| -30% | +42.9% | High |
| -40% | +66.7% | High |
| -50% | +100.0% | Critical |
| -60% | +150.0% | Critical |
| -70% | +233.3% | Critical |
| -80% | +400.0% | Critical |
| -90% | +900.0% | Critical |
Why Drawdown Recovery Is Non-Linear
This is the most important concept in trading risk management: losses are asymmetric. A 50% drawdown requires a 100% gain to recover. A 90% drawdown needs a 900% gain. This is why professional traders obsess over position sizing — keeping drawdowns small is far more important than chasing big wins.
The 2% Rule
Most professional traders risk no more than 1-2% of their account per trade. At 2% risk per trade, you'd need 10 consecutive losses to hit a 20% drawdown — which only requires a 25% gain to recover. At 5% risk per trade, 10 losses = 50% drawdown = 100% gain needed. The math is clear.
Compound Recovery Time
Use our compound growth calculator to see how long it takes to recover. At a consistent 5% monthly return, a 20% drawdown takes ~5 months to recover. A 50% drawdown takes ~15 months. This is why capital preservation is job #1.