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The gain it takes to get back.

Losses and gains are not symmetrical. A 50% loss needs a 100% gain to recover. Put in a drawdown and see what it takes, and how long, at the return you actually make.

The drawdown

Your pace

Loss and the gain that undoes it

The deeper the hole, the faster the climb out grows.

Loss5%10%15%20%25%30%40%50%60%70%75%80%90%
Gain needed5.3%11.1%17.6%25.0%33.3%42.9%66.7%100%150%233%300%400%900%

The formula

gain needed = 1 ÷ (1 − loss) − 1

A 30% loss leaves 70% of the account. Getting back to 100% from 70% is a gain of 30 ÷ 70, about 42.9%. At 50% down it is 100%, and at 90% down it is 900%.

Why this decides how much to risk

Small drawdowns are cheap to recover from and deep ones are not, which is the case for small risk per trade. Losing 10% needs 11% back; losing 40% needs 67%. A long losing run at 1% a trade is an uncomfortable month. The same run at 5% a trade is a 40% hole that can take half a year or more to climb out of. See how often runs like that happen with the risk of ruin simulator.

How long it takes

With a steady return per period, the time to recover is the number of periods for that return to compound up to the gain needed: the log of 1 ÷ (1 − loss) divided by the log of (1 + return). Real returns are not steady, so read it as a best case.