How much gain do you need to recover from a drawdown? (formula, table and examples)
A 10% loss does not need a 10% gain to get back to where you were. It needs 11.11%. A 50% loss needs 100%. The deeper the drawdown, the faster the required gain grows — and that is the main reason to keep losses small.
This post shows the formula, a drawdown table from 10% to 90%, three worked examples, and what it means for how you size trades.
Free calculator: Drawdown Recovery Calculator — runs in your browser, nothing you type is sent anywhere.
This is for education, not financial advice. It is arithmetic only and doesn't tell you what or when to trade.
Drawdown recovery formula: gain needed to recover a loss
Gain needed = 1 ÷ (1 − loss) − 1
Write the loss as a decimal (25% = 0.25). Multiply the answer by 100 to get a percentage.
- 10% loss: 1 ÷ 0.90 − 1 = 0.1111 → 11.11%
- 25% loss: 1 ÷ 0.75 − 1 = 0.3333 → 33.33%
- 50% loss: 1 ÷ 0.50 − 1 = 1 → 100%
Why it isn't symmetric: after a loss, you are earning the gain on a smaller balance. Lose 50% of $10,000 and you have $5,000. A 50% gain on $5,000 is only $2,500, which takes you to $7,500 — not back to $10,000.
Drawdown table: 10% to 90%
| Drawdown | Gain needed to recover | Left of every 100 | Balance must grow by |
|---|---|---|---|
| 10% | +11.11% | 90 | ×1.11 |
| 20% | +25.00% | 80 | ×1.25 |
| 30% | +42.86% | 70 | ×1.43 |
| 40% | +66.67% | 60 | ×1.67 |
| 50% | +100.00% | 50 | ×2.00 |
| 60% | +150.00% | 40 | ×2.50 |
| 70% | +233.33% | 30 | ×3.33 |
| 80% | +400.00% | 20 | ×5.00 |
| 90% | +900.00% | 10 | ×10.00 |
Look at the steps between rows. Going from a 10% to a 20% drawdown adds 13.89 points to the gain you need. Going from 40% to 50% adds 33.33 points. Going from 80% to 90% adds 500 points. Each extra 10% of loss costs more than the one before.
Example 1: from your balance and peak
- Highest balance (peak): $10,000
- Current balance: $8,000
Drawdown = (10,000 − 8,000) ÷ 10,000 = 20% Gain needed = 1 ÷ (1 − 0.20) − 1 = 25% Amount to make back = $2,000
Check: $8,000 × 1.25 = $10,000. The dollar amount is the same $2,000 you lost, but as a percentage of what you have now it is 25%, not 20%.
Example 2: how many winning trades at 1% risk and 2R?
Same 20% drawdown. Suppose you risk 1% of your current balance per trade, and a winning trade makes 2R — twice the amount risked, so +2% of the balance.
Because each win is 2% of a balance that keeps growing, the count is:
Winning trades = ln(1 ÷ (1 − drawdown)) ÷ ln(1 + risk × R)
= ln(1.25) ÷ ln(1.02)
≈ 11.27 → 12 winning trades
Check: 1.02 to the power 11 is about 1.243 (not quite 1.25), and to the power 12 is about 1.268. So 11 wins take $8,000 to about $9,947, and the 12th takes it past $10,000.
This assumes every trade in between is a win. Each 1% losing trade along the way needs about 0.51 more wins at 2R to make up. Real results come in mixed order, so treat the number as a rough guide to scale, not a forecast.
Example 3: the same rule at deeper drawdowns
Still risking 1% per trade at 2R, here is the rough count of consecutive wins needed to recover:
| Drawdown | Gain needed | Winning trades (1% risk, 2R) |
|---|---|---|
| 10% | +11.11% | 6 (5.32) |
| 20% | +25.00% | 12 (11.27) |
| 30% | +42.86% | 19 (18.01) |
| 40% | +66.67% | 26 (25.80) |
| 50% | +100.00% | 36 (35.00) |
A 50% drawdown is five times deeper than a 10% one, but needs about six to seven times as many wins (35.00 vs 5.32).
Why stopping losses early matters
The table shows the core point: the gain needed to recover grows faster than the loss itself. A small drawdown can be recovered with a modest run of trades. A large one can take a very long time, even with a sound method.
That is why many traders decide the maximum loss per trade before they enter. Ten 1% losses in a row, each taken from the current balance, leave you about 9.56% down — which needs about 10.57% to recover. Ten losses of 5% each would leave you around 40% down, needing roughly 67%.
Small, fixed losses come from two things: a stop placed before you enter, and a position size worked out from the distance to that stop. If you want to see how to do the second part, read How to calculate forex position size from your stop-loss or use the Forex position size calculator.
Common mistakes when reading drawdown
- Measuring from the starting balance instead of the peak. Drawdown is the fall from the highest balance reached, not from your first deposit.
- Adding percentages. A −20% month followed by a +20% month is not break-even: $10,000 → $8,000 → $9,600.
- Ignoring deposits and withdrawals. Money you add or take out changes the balance without being a gain or loss. Adjust for it before working out the drawdown.
- Treating the win count as a plan. It is arithmetic on an ideal sequence. Losses, costs and spread all push it higher.
Quick checklist
- ☐ I know my peak balance and my current balance
- ☐ I worked out the drawdown from the peak, not from my first deposit
- ☐ I checked the gain needed with the formula or the table, not by guessing
- ☐ I decided my maximum risk per trade before entering
- ☐ My position size comes from my stop distance and that risk
Try your own numbers: Drawdown Recovery Calculator
The examples are arithmetic only and use made-up balances. They ignore spread, commissions and swaps.