Why a 20% loss needs a 25% gain
The gain that recovers a loss of X% is X ÷ (100 minus X), as a percentage. A 20% loss takes 10,000 to 8,000, and the 2,000 that gets it back is 25% of 8,000, not 20%. The gap widens as the loss grows: 10% needs 11.1%, 30% needs 42.9% and 50% needs 100%.
What a run of losses costs
The second calculator takes each loss as a share of the balance left after the one before, which is how a fixed risk percentage behaves. Ten losses at 1% leave 0.99 to the power of 10, 90.4% of the account: a 9.6% drawdown that needs a 10.6% gain to recover. At 2% the same ten losses cost 18.3% and need 22.4% to recover; at 3%, 26.3% and 35.6%.
A worked example
The values loaded here are a 20% drawdown in the first calculator, and ten losses in a row at 1% on a 10,000 balance in the second. The first returns 25.0%. The second leaves 9,043.82, a loss of 956.18 or 9.6%, and needs a 10.6% gain to get back to 10,000. If every loss were a fixed 1% of the starting balance instead, the ten would cost exactly 10%.
What it means for your risk per trade
Doubling the risk per trade more than doubles the climb out of a bad run, because every recovery trade is sized from a smaller balance. Five losses at 2% cost about what ten cost at 1%. Choose your risk per trade on a calm day, knowing what a run would do at that size: the risk per trade guide sets out the choices, and the losing streaks guide covers the week after a run.
What the calculator assumes
Every loss is a full stop at the chosen risk, with no wins in between and no costs. Real runs mix in partial losses, breakevens and costs, so treat the figures as the arithmetic of the run, not a forecast of how often one comes. For the odds of a run at a given win rate, use the losing streak calculator.
Questions
How much do I need to gain to recover a 50% loss?
100%. Half the account has to double to get back to where it started. A 30% loss needs 42.9% and a 10% loss needs 11.1%.
How do you calculate drawdown?
Drawdown is the fall from the account’s highest value to its current value, as a percentage of the high: from 10,000 down to 8,500 is a 15% drawdown. After a run of losses at a fixed risk per trade, it is 1 minus (1 minus the risk) to the power of the number of losses.
Why is a loss harder to win back than it looks?
Because the recovery starts from a smaller balance. After a 20% loss every gain is worked out on 80% of the old balance, so adding back the missing 20 takes a 25% gain.
Does risking a fixed amount change the result?
A little. With a fixed amount, every loss is the same share of the starting balance, so ten losses at 1% cost exactly 10%. With a fixed percentage of the current balance, each loss is slightly smaller than the last, and ten cost 9.6%.
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