The asymmetry
Start with $10,000 and lose 50%. You have $5,000. To get back to $10,000 you must earn $5,000, which is a 100% gain on the $5,000 that remains. A gain of 50% would only take you to $7,500.
The formula
Gain needed at different drawdowns
| Drawdown | Gain needed to recover |
|---|---|
| 10% | +11.1% |
| 20% | +25.0% |
| 30% | +42.9% |
| 40% | +66.7% |
| 50% | +100.0% |
| 60% | +150.0% |
| 70% | +233.3% |
| 80% | +400.0% |
| 90% | +900.0% |
The curve bends upward. A 10% loss needs 11.1%, but each extra point of drawdown costs more to repair than the one before. Past 50% the required gain is more than 100%, and at 90% it is 900%.
How long does recovery take?
Time to recover = ln(1 ÷ (1 − drawdown)) ÷ ln(1 + monthly return). At a steady 2% a month, a 20% drawdown takes 11 months, a 30% drawdown takes 18 months, and a 50% drawdown takes 35 months. At 5% a month those become 5, 7 and 14 months. Few traders sustain 5% a month, so real recoveries take longer.
Equal losses and gains do not cancel
Lose 30% then gain 30%: 0.7 × 1.3 = 0.91. You are still down 9%. This is why a strategy that makes and loses the same percentage in turn slowly shrinks, a drag sometimes called volatility decay.
What to do with this
- Use the drawdown recovery calculator to see the gain and the time for your own numbers.
- Keep risk per trade small enough that normal losing streaks stay shallow. See how much to risk per trade.
- Set a maximum drawdown at which you stop and review, such as 10% or 15%.
Try it with your own numbers
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The best recovery is the loss you avoided.
Reading trend strength and exhaustion helps you stay out of deep drawdowns.
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Last updated October 2026. For education only. Not financial advice.