Losses and gains are not symmetrical
Gain required = Drawdown ÷ (1 − Drawdown)
A 10% loss needs an 11.1% gain to recover. A 50% loss needs a 100% gain. The deeper the drawdown, the steeper the climb.
| Drawdown | Gain to recover |
|---|---|
| 5% | 5.3% |
| 10% | 11.1% |
| 20% | 25.0% |
| 30% | 42.9% |
| 50% | 100.0% |
This is the strongest argument for small, fixed risk per trade: it keeps drawdowns in the range where recovery is realistic. See how to manage risk like a professional.
Frequently asked questions
What is maximum drawdown?
Maximum drawdown is the largest peak-to-trough decline in account equity over a period. Prop firms use it as a hard limit on funded accounts.
Calculators are provided for educational purposes. Risk warning: Trading leveraged products involves a high risk of loss. Nothing on this site is investment advice.