Why does a 50% drawdown need a 100% gain to recover?

After a 50% drawdown, half the capital remains. Doubling that remaining capital is required to return to breakeven, so the recovery return is 100%.

Is drawdown recovery the same as making back the loss percentage?

No. Losses and recovery are not symmetrical. The deeper the drawdown, the larger the percentage gain required to recover.

Drawdown maths, without the spreadsheet goblins

Drawdown Recovery Calculator

Q: How do you calculate drawdown recovery?

Drawdown recovery is calculated as drawdown divided by one minus the drawdown. A 30% drawdown needs a 42.9% gain because the recovery is earned from the smaller remaining balance.

See the return required to recover from a drawdown. The lesson is simple: losses and recovery are not symmetrical.

Required recovery return 42.9% to recover from a 30% drawdown

$100,000starting balance

$70,000after drawdown

-$30,000dollar loss

+$30,000profit needed

Readout

A 30% drawdown requires a 42.9% gain to recover.

Lesson

This is why avoiding deep drawdowns matters more than it feels in the moment.

Before, drawdown, recovery

Recovery curve

Drawdown recovery quick reference

The bigger the hole, the steeper the climb

Why it matters

A drawdown reduces the capital base you are trying to grow from. That is why the recovery return is always larger than the loss percentage. Down 10% is annoying. Down 50% means you need to double what remains just to get back to breakeven.

Drawdown recovery FAQs

The headline lesson: losses and recovery are not symmetrical. Markets are rude like that.

How do you calculate drawdown recovery?

Drawdown recovery is calculated as drawdown ÷ (1 − drawdown). A 30% drawdown needs a 42.9% gain because the recovery is earned from the smaller remaining balance.

Why does a 50% drawdown need a 100% gain?

After a 50% drawdown, half the capital remains. You need to double that remaining capital to get back to breakeven.

Is recovery the same as making back the loss percentage?

No. Down 20% needs +25% to recover. Down 40% needs +66.7%. The bigger the hole, the steeper the climb.

Related Marble Lab tools

Use the Position Sizing Calculator to test whether a setup’s drawdown is tolerable, or the Compounding Returns Calculator to compare smooth and bumpy growth paths.