RISK MANAGEMENT
Drawdown Recovery Calculator
A drawdown is a debt with compound interest: the deeper it gets, the bigger the gain needed to escape it. See the exact math — then a realistic, simulated timeline for climbing out with your own win rate and risk.
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THE HOLE / REQUIRED GAIN
LiveGAIN REQUIRED TO BREAK EVEN
+25%
a −20% drawdown must be climbed on a smaller base
| Drawdown | Required gain |
|---|---|
| −5% | +5.3% |
| −10% | +11.1% |
| −15% | +17.6% |
| −20% | +25% |
| −25% | +33.3% |
| −30% | +42.9% |
| −40% | +66.7% |
| −50% | +100% |
required gain = drawdown ÷ (1 − drawdown). The deeper the hole, the faster the required gain grows — a 50% loss needs a 100% win.
RECOVERY TIMELINE FROM YOUR STATS
LiveEXPECTANCY PER TRADE
0.125R
≈ 0.125% of equity per trade
ESTIMATED RECOVERY
~64 days
191 trades at expectancy
1,000 seeded runs, fixed fractional risk, independent trades — real results vary. Not a prediction.
required gain = dd ÷ (1 − dd) · expectancy (R) = win% × avg win − loss% × avg loss · 1,000 seeded runsTHE MATH
Losses are asymmetric — and the asymmetry compounds
Percentages hide a trap: a loss and a gain of the same size don't cancel. Every percent you lose must be won back on a smaller account.
Lose 10% and you need 11.1% to break even — barely noticeable. Lose 20% and you need 25%. Lose a third and you need 50%. Lose half and you must double your account just to get back to where you started. The formula is simple — required gain = drawdown ÷ (1 − drawdown) — but its shape is what matters: the cost of recovery doesn’t grow linearly with the drawdown, it accelerates. The second half of a deep drawdown does far more damage than the first half.
This is why professional risk managers obsess over cutting drawdowns early rather than trading through them. Keeping a drawdown at 15% instead of 30% doesn’t just halve your recovery problem — it cuts the required gain by well over half (17.6% instead of 42.9%). Small, consistent risk per trade is what keeps you on the flat part of the curve, where recoveries are routine instead of heroic.
THE RECOVERY
Why grinding out beats doubling down
The instinct in a drawdown is to size up and win it back fast. The simulation shows what that actually does to your odds.
Doubling your risk per trade does shorten the average recovery — that’s real, and it’s why the temptation exists. What it also does, and what a single average hides, is widen the whole distribution: the p90 slow case gets uglier, and the probability that the hole deepens by another 10% before any recovery rises sharply. You’re trading a modest improvement in the typical case for a much larger chance of the exact outcome — a deeper hole, with an even steeper required gain — that ends trading careers. And that’s assuming your edge survives the added pressure, which for most traders it doesn’t.
The boring strategy dominates: keep risk constant (or cut it), let expectancy compound, and measure progress in trades rather than days. A 45% win rate at 1.5R wins and 1% risk climbs out of a 20% drawdown in around 150–200 trades in the median case — a couple of months at three trades a day, with no heroics required. What actually shortens recoveries is improving the stats themselves: a journal that shows which setups drag your expectancy down typically buys you more R per trade than any amount of extra risk.
FAQ
Why does a 50% drawdown need a 100% gain to recover?＋
Because the gain has to be earned on a smaller base. Losing 50% of $10,000 leaves $5,000 — and $5,000 must double (+100%) just to get back to $10,000. The formula is required gain = drawdown ÷ (1 − drawdown), and it accelerates fast: 20% needs 25%, 33% needs 50%, 50% needs 100%.
How does the recovery timeline simulation work?＋
It starts your equity at the bottom of the drawdown and replays your stats — win rate, average win and loss in R, and risk per trade — 1,000 times with a seeded random sequence, compounding each trade. It reports how many days the fast (p10), median (p50), and slow (p90) runs took to make a new high.
What does 'hole deepens another 10% first' mean?＋
It's the share of the 1,000 simulated recoveries where equity fell a further 10% below the drawdown low before eventually recovering (or failing to). Even a genuinely positive edge often gets worse before it gets better — knowing that number in advance keeps a normal deepening from feeling like a catastrophe.
Should I increase my risk per trade to recover faster?＋
The simulation lets you test it: doubling risk roughly halves the deterministic recovery time, but it also widens the distribution and sharply raises the probability that the hole deepens first — the exact failure mode that turns a recoverable drawdown into a blown account. Grinding at normal size wins on survival probability.
What win rate do I need for the timeline to be finite?＋
Your expectancy has to be positive: win rate × avg win (R) must exceed (1 − win rate) × avg loss (R). If it isn't, the calculator shows 'Never' — no amount of trading recovers a drawdown with a negative edge; the stats themselves have to change first.
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