Drawdown Recovery
Why a 50% loss needs a 100% gain to break even — the asymmetry that quietly ends most trading accounts.
Your drawdown
Why it's asymmetric
Losses shrink the base the recovery must grow from. Lose half, and the remaining half has to double. The dashed line in the chart is what symmetry would look like — reality bends away from it fast.
Frequently asked questions
Why is recovery asymmetric?
Because the gain has to be earned on a smaller base. Lose 50% and only half the account remains — that half must double just to get back to flat. The formula 1 ÷ (1 − DD) − 1 is that shrinking-base effect written down.
Does this apply to leveraged accounts too?
Identically — leverage just gets you to the deep drawdowns faster. The asymmetry is a property of percentages themselves, not of any instrument or account type.
What is a realistic monthly recovery rate?
Be honest with the months-to-recover table: sustained double-digit monthly returns are rare, and chasing them after a drawdown is how a −30% hole becomes a −60% one. Most durable recoveries are built on the same small edge that should have prevented the hole.