Drawdown Recovery Calculator

The exchange rate between losing and recovering is not 1:1

Lose 10% and you need 11.1% back. Lose 25% and you need 33.3%. Lose 50% and you need to double the account. Lose 90% and you need 900% — ten times what is left — which is why accounts that deep effectively never come back.

The reason is not a trick of the percentages. It is that the loss was taken on the larger balance and the gain has to be earned on the smaller one. Every percent you lose is worth more money than the percent that has to replace it, and the gap widens the deeper you go. That is the whole of it:

recovery = drawdown ÷ (1 − drawdown)

Traders quote the 50%/100% pair constantly and then size as though the relationship were linear. The ladder in the calculator exists to make the curve visible, because the interesting part is not the famous number at 50% — it is how gently the cost rises up to about 20% and how violently it accelerates after 30%. Everything to the left of that inflection is a bad week. Everything to the right is a different career.

The half nobody quotes: how long it takes

“You need 33% to recover” is a true statement that tells you nothing useful, because it does not say how long. And time is what actually decides the outcome — not because of the money, but because a recovery measured in months is a recovery you have to stay disciplined through.

With percentage-of-balance sizing, each trade multiplies the account by roughly (1 + risk × expectancy), so the trade count is a logarithm rather than a division:

trades = ln(1 ÷ (1 − drawdown)) ÷ ln(1 + risk × expectancy)

Put real numbers in and it stops being abstract. A 25% drawdown, a 45% win rate at 1:2 — a genuinely good edge, +0.35R a trade — and 1% risk: about 83 trades. At five trades a week that is four months of doing everything right to get back to where you started. Nobody plans for that, and it is the reason the recovery so often fails at the trader rather than at the strategy.

This is an expectation, not a forecast. Any real sequence wanders around it, and the wandering is the point of the risk of ruin calculator, which simulates thousands of paths instead of averaging them. Use this number for the order of magnitude, not the date.

Why increasing size to recover faster is the trap

The instinct after a drawdown is to make it back quickly, and the arithmetic above appears to endorse it: double the risk and the recovery halves. It does — on average.

What doubles alongside it is the variance, and the variance is what put you in the hole. You are now running double the volatility on a smaller balance with less room beneath it, at the moment your judgement is worst. If a 25% drawdown was an ordinary outcome at 1% risk, then at 2% the same ordinary streak takes you to 45%, which needs an 82% gain, from an account that is now one more bad run from being finished.

This is the actual mechanism behind most blown accounts, and it is worth being precise about it: they are rarely killed by a bad strategy. They are killed by a decent strategy, sized up in response to a loss that the strategy was always going to produce.

Cutting size instead — what it costs, and why it can still be right

The opposite reflex is to halve the size until confidence returns. The calculator prices it: halving your risk roughly doubles the trades to flat. An 83-trade recovery becomes 165.

On the arithmetic alone, that is a bad trade. But the arithmetic assumes something that is usually false during a drawdown — that you keep executing the tested strategy exactly as written. Most people do not. They skip the setup after three losses, take the marginal one after four, move the stop on the fifth. At that point the thing being run is no longer the thing that was tested, and its expectancy is unknown.

So the real question is not mathematical. If trading smaller is what keeps you following the rules, take the slower recovery — a longer climb with a real edge beats a faster one with no edge at all. If you can hold size and stay mechanical, hold size. What is not on the menu is trading bigger and looser.

The drawdown you can avoid is worth more than the one you recover

Every number on this page is a consequence of one earlier decision: how much you risked per trade. The streak grid above shows it directly — a run of ten losses costs about 9.6% at 1% risk and 40% at 5%. Same strategy, same streak, same market. One is a slow fortnight; the other needs a 67% gain and usually a new account.

Notice too that a losing run compounds downward: ten losses at 1% is 9.6%, not 10%, because each loss is taken on a smaller balance. That works in your favour and it is the reason percentage sizing cannot mathematically reach zero — but it is a small mercy, and it disappears entirely if you risk a fixed cash amount set once at the start, which silently becomes a larger percentage as the account falls.

The two things that actually set the depth of your worst drawdown: position size, which you control completely, and the length of the losing streaks your win rate produces, which you do not control but can measure. Do both before the drawdown, not during it.

Prop firm drawdowns are a different problem

On a funded account there is no recovery to calculate. The limit is a rule: touch the maximum drawdown and the account is closed, whatever the strategy would have done next.

Those limits are typically 8–12% total, frequently trailing the equity high rather than fixed to the starting balance — so a good week raises the floor and a normal give-back after it can breach a level that was never near the starting capital. There is usually a separate daily loss cap on top, and that is what ends most attempts, not the total. The prop firm challenge calculator simulates the full rule set, including the finding that pass rate against risk per trade has a peak rather than rising or falling cleanly.

Where the inputs should come from

This tool is only as honest as the win rate you type into it, and a remembered win rate is almost always too high. So is one measured by scrolling back through a chart you have already seen — hindsight reliably adds ten to twenty points, and here that shows up as a comfortable recovery estimate that is fiction.

The figure worth using comes from marking setups on price you could not see ahead of: bar-by-bar replay, logged, over a sample large enough to mean something. The backtest sample size calculator tells you whether yours is large enough, and the mistakes that make backtest results worthless covers how good-looking numbers get manufactured by accident.

Frequently asked questions