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Drawdown recovery calculator — what it takes to get back to even
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Short answer
The gain needed to recover a loss is loss ÷ (1 − loss), always larger than the loss itself: −10% needs +11.1%, −25% needs +33.3%, −50% needs +100%, and −70% needs +233%. The asymmetry exists because the recovery must be earned on a smaller base. It is the arithmetic reason risk management outranks return-chasing: losses compound against you faster than gains compound for you.
Gain needed to recover
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Per ₹1,00,000 of capital
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Recovery time at 15%/yr
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Reference: gain needed to recover a loss
Required gain = loss ÷ (1 − loss). The recovery is always larger than the loss because it is earned on the reduced base.
| Loss | Gain needed to recover | Years at 15% p.a. |
|---|---|---|
| −5% | +5.3% | 0.4 |
| −10% | +11.1% | 0.8 |
| −20% | +25% | 1.6 |
| −30% | +42.9% | 2.6 |
| −40% | +66.7% | 3.7 |
| −50% | +100% | 5 |
| −60% | +150% | 6.6 |
| −70% | +233.3% | 8.6 |
| −80% | +400% | 11.5 |
| −90% | +900% | 16.5 |
Percentages lie about symmetry. Lose 20% and gain 20% and you are not back to even — you are down 4%, because the gain worked on a smaller base. The deeper the hole, the more vicious the curve: past −50%, every additional 10% of drawdown adds roughly 60–200 percentage points to the required recovery. Traders who internalise this curve size positions differently forever.
Enter a drawdown percentage below to see the required recovery gain, or start from your capital figures. The table under the tool shows the full curve.
Why the asymmetry exists — and where it starts to kill
A loss shrinks the base that must produce the recovery: after −50%, doubling the remainder only restores the start. Up to about −15% the penalty is mild (a 15% loss needs 17.6% back — hard but ordinary). Between −20% and −40% it turns serious: a 40% drawdown demands a 67% recovery, which at a realistic 15% annual return takes over three and a half years of uninterrupted success. Beyond −50%, recovery requirements enter territory — +100%, +150%, +233% — that most traders never achieve, which is why deep drawdowns end careers not through the money alone but through the incentive to gamble the remainder.
The curve also explains a quiet truth about compounding: two strategies with equal average returns but different volatility do not finish equal — the volatile one spends more of its life in recovery mode, paying the asymmetry tax repeatedly. Cutting the depth of losses raises long-run growth even when it trims the average return.
Engineering shallower drawdowns
Every tool of risk management is, at bottom, an attack on this curve. Position sizing caps the damage of any single trade; a daily loss cap prevents one session from digging the hole; stop-losses bound individual positions; and diversification across uncorrelated strategies keeps their drawdowns from arriving together. None of these raise returns directly — they work by keeping the account off the steep part of the recovery curve.
Before trusting any strategy with capital, know its drawdown behaviour in advance: a backtest’s maximum drawdown shows the worst historical episode, and Monte Carlo simulation shows the plausible range of deeper ones the future may hold. INDfolio AI reports max drawdown and drawdown duration on every backtest and enforces daily loss caps in the cloud on every live strategy — the two ends, measurement and enforcement, of the same defence.
These calculators are free, run entirely in your browser, and store nothing. They produce estimates for NSE trades based on published rates and standard formulas — not investment advice, and not a substitute for your broker’s contract note. INDfolio AI builds algo trading software; the honest connection is that our backtests apply this same cost arithmetic to every simulated trade.