Calculator
Drawdown recovery calculator
Enter the peak balance and the drawdown in percent. You see the gain it takes to get back to the peak, the periods that takes at a steady return, and how many losses in a row lead there.
- Gain needed to recover
- 25.00%
- Balance now
- $8,000.00
- Back to the peak
- $2,000.00
- Time to recover
- 12 periods
- Losses that cause it
- 23 losses in a row
Worked example
Your account peaked at $10,000 and is now down 20%, at $8,000.00. The way back is $2,000.00, but measured from $8,000.00 that is a gain of 25.00%, not 20%.
At an illustrative 2% a month the climb takes 12 periods. And if you risk 1% of the balance on each trade, 23 losses in a row would take you this deep in the first place.
The gap widens with every step down: 11.11% after a 10% drawdown, 42.86% after 30%, 100.00% after 50% and 900.00% after 90%. That is why the size of each loss matters more than the size of each win. Set the size before the trade with the lot size calculator.
The formula
Gain needed = 1 ÷ (1 − drawdown) − 1. A 20% drawdown leaves 0.8 of the peak, and 1 ÷ 0.8 = 1.25, so it takes a 25% gain.
Time to recover = ln(1 ÷ (1 − drawdown)) ÷ ln(1 + return per period), rounded up to whole periods. Losses that cause it = ln(1 − drawdown) ÷ ln(1 − risk per trade), rounded up: each loss takes the risk share of what is left.
Drawdown and the gain it takes to recover
| Drawdown | Gain needed |
|---|---|
| 5% | 5.26% |
| 10% | 11.11% |
| 20% | 25.00% |
| 25% | 33.33% |
| 30% | 42.86% |
| 40% | 66.67% |
| 50% | 100.00% |
| 60% | 150.00% |
| 75% | 300.00% |
| 90% | 900.00% |
Plain arithmetic: 1 ÷ (1 − drawdown) − 1.
Questions and answers
How much do I need to gain to recover from a loss?
Divide 1 by what is left and take 1 off. After a 20% loss 0.8 is left, 1 ÷ 0.8 = 1.25, so you need a 25% gain. After 50% you need 100.00%.
Why is the gain bigger than the loss?
The gain is worked out on a smaller balance. A $10,000 account down 20% holds $8,000, and $2,000 back is 25% of $8,000.
How many losing trades make a 20% drawdown?
At 1% risk on the balance each time, 23 losses in a row. At 2% it takes 12 and at 5% only 5, which is why most traders keep the risk per trade small.
What is maximum drawdown?
The largest fall from a peak to a low before a new peak. Type that fall in percent here to see what it took, or would take, to get back.
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