Free tool
Drawdown recovery calculator
See the gain you need to recover from a drawdown, and what a losing streak at your risk per trade does to your account, compounded trade by trade.
Quick answer: To recover from a drawdown of d, you need a gain of d ÷ (1 − d). A 10% drawdown needs 11.1%, a 20% drawdown needs 25% and a 50% drawdown needs 100%. Ten losses in a row at 1% risk leave 90.44% of your account, which then needs a 10.57% gain to recover.
1. Gain needed to recover from a drawdown
2. What a losing streak does to your account
| Lossesin a row | Account left | Balance | Gain to recover |
|---|
Each loss is the risk percentage of the balance at that moment, so the losses shrink as the account shrinks (compounded). Highlighted row: your streak.
For education only. Past streaks do not predict future ones, and real losses can exceed your plan when prices gap past a stop.
How it's calculated
A drawdown is the fall from your account's peak, as a percentage. After a drawdown of d, what is left is (1 − d) of the peak. To grow it back to 100% you need a gain of 1 ÷ (1 − d) − 1, which is the same as d ÷ (1 − d).
For a losing streak, each loss is your risk per trade r of the balance at that moment. After n losses in a row, the account left is (1 − r) to the power of n.
Worked example
- A 20% drawdown leaves 0.80 of the account. Gain needed = 0.20 ÷ 0.80 = 25%.
- A 50% drawdown leaves 0.50. Gain needed = 0.50 ÷ 0.50 = 100%.
- You risk 1% a trade on $10,000 and lose 10 in a row. Account left = 0.9910 = 0.9044, so 90.44%, or $9,043.82. The drawdown is 9.56%.
- Gain needed to recover = 1 ÷ 0.9044 − 1 = 10.57%.
- At 2% a trade, the same ten losses leave 81.71% and need a 22.39% gain: more than double the damage.
Common mistakes
- Thinking a loss and the same gain cancel out. Lose 20% and then gain 20% and you are still 4% down: 0.8 × 1.2 = 0.96.
- Raising risk to win it back faster. Bigger trades during a drawdown make the next losses bigger too, and push you further up the steep part of the curve. This is how revenge trading turns a normal streak into a serious one.
- Planning for a streak that is too short. A losing streak of eight or ten trades is ordinary over a few hundred trades. Check what that streak does at your risk before it happens.
Frequently asked questions
Why does a 50% loss need a 100% gain?
Because the gain is measured on a smaller account. Lose half of $10,000 and you have $5,000. To get back to $10,000 you must make another $5,000, which is 100% of what is left.
Is losing 10 trades at 1% the same as losing 10%?
Slightly less. If each loss is 1% of the balance at that moment, every loss is a little smaller than the one before. Ten in a row leave 0.99 to the power of 10, which is 90.44% of the account, a drawdown of 9.56% rather than 10%.
How long a losing streak should I plan for?
Longer than feels comfortable. Even a method that wins half its trades will meet streaks of six, eight or more losses over a few hundred trades through chance alone. Size your risk per trade so that a streak like that leaves a drawdown you could recover from.
What is a reasonable maximum drawdown?
There is no single number, but the recovery curve gives a guide: up to about 20% the gain needed stays close to the loss (25%), while beyond 30 to 40% it climbs steeply. Many traders set a hard limit at which they stop and review rather than trade on.
Learn more
- Academy lesson: drawdowns
- Academy lesson: risk per trade
- Academy lesson: losing streaks
- Drawdown in trading: what it is and how to recover from it
- How to handle a losing streak without blowing up
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