Capital Recovery Calculator
The math of recovery is unforgiving. Every percentage point you lose requires more than a percentage point to recover. This calculator reveals the exponential curve of loss recovery — and why avoiding large drawdowns is the foundation of long-term trading success.
Enter any drawdown percentage and instantly see the return needed to break even. The chart shows how the recovery requirement accelerates as losses deepen.
How much you've lost from peak
Recovery Requirement
Return Needed to Recover
33.33%
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See Jungle RebounderRecovery Curve: The Exponential Nature of Losses
Notice how recovery requirements grow exponentially as drawdowns increase
How It Works
Calculation Methodology
This tool calculates the exponential nature of loss recovery. The recovery requirement grows exponentially as drawdowns increase - a 50% loss requires 100% recovery, not 50%.
Key Insight: Recovery is exponential, not linear. A 20% loss requires 25% recovery. A 50% loss requires 100% recovery. A 75% loss requires 300% recovery. The larger the loss, the more disproportionate the recovery requirement becomes. This is why avoiding large drawdowns is critical for long-term success.
Learn more about risk management:
Position sizing guideExample Scenario
Setup: 25% drawdown
What this means: After a 25% loss, you have 75% of your capital remaining. To get back to 100%, you need to make 33.3% on your remaining capital. The recovery requirement (33.3%) is greater than the loss (25%) - this is the exponential nature of recovery.
Common Mistakes & Warnings
- ⚠Thinking recovery equals loss: A 25% loss doesn't need 25% to recover - it needs 33.3%. The math is asymmetric.
- ⚠Not understanding the exponential curve: Recovery requirements grow exponentially. A 50% loss requires 100% recovery, not 50%.
- ⚠Taking excessive risk to recover: After a big loss, traders often increase risk to "make it back fast." This usually leads to more losses.
- ⚠Not stopping losses early: Letting a 10% drawdown become 25% or 50% makes recovery exponentially harder. Cut losses early.
Example Scenarios
Try these realistic scenarios to understand the exponential nature of recovery requirements.
Scenario 1: Small Drawdown (10%)
Manageable loss with minimal recovery asymmetry.
Step-by-Step Calculation:
- Recovery needed: ((100 ÷ 90) - 1) × 100 = 11.1%
- Multiplier: 100 ÷ 90 = 1.11x
- If account was $10,000, now $9,000
- Need to make $1,000 on $9,000 = 11.1% return
What this means: A 10% drawdown requires 11.1% recovery - almost the same. The asymmetry is minimal. This is easily recoverable with normal trading performance.
Scenario 2: Moderate Drawdown (25%)
Significant loss with noticeable recovery requirement.
Step-by-Step Calculation:
- Recovery needed: ((100 ÷ 75) - 1) × 100 = 33.3%
- Multiplier: 100 ÷ 75 = 1.33x
- If account was $10,000, now $7,500
- Need to make $2,500 on $7,500 = 33.3% return
What this means: A 25% drawdown requires 33.3% recovery - significantly more. The asymmetry becomes noticeable. You need a 33% return on your remaining capital just to break even. This is challenging but possible with good trading.
Scenario 3: Large Drawdown (50%)
Catastrophic loss. Recovery requires doubling your account. ⚠️ Extreme difficulty
Step-by-Step Calculation:
- Recovery needed: ((100 ÷ 50) - 1) × 100 = 100%
- Multiplier: 100 ÷ 50 = 2.0x
- If account was $10,000, now $5,000
- Need to make $5,000 on $5,000 = 100% return (double your account)
What this means: A 50% drawdown requires 100% recovery - you need to double your remaining capital just to break even. This is extremely difficult and most traders never recover from 50%+ drawdowns. The exponential curve makes recovery nearly impossible.
Edge Case Warning: At 50% drawdown, you need 100% returns to recover. This typically requires taking excessive risk, which often leads to further losses. Most traders who hit 50% drawdown never fully recover. Always stop trading before reaching this point.
What If Variations
Explore how different drawdown levels affect recovery:
What if drawdown is 75% instead of 50%?
Recovery needed jumps from 100% to 300%. Multiplier increases from 2.0x to 4.0x. You need to 4x your remaining capital. This is essentially impossible to recover from.
What if you stop at 20% instead of letting it become 50%?
Recovery needed drops from 100% to 25%. Multiplier drops from 2.0x to 1.25x. Stopping early prevents catastrophic drawdowns. Always have a maximum drawdown limit.
What if recovery curve is exponential, not linear?
The recovery curve is exponential - each additional 10% drawdown requires exponentially more recovery. 10% needs 11%, 20% needs 25%, 30% needs 43%, 50% needs 100%. The curve accelerates dramatically as losses increase.
Frequently Asked Questions
When should I use this tool?
Use this tool to understand the recovery challenge after any drawdown. Check it when you're down to see how much return you need to break even, or use it proactively to understand why avoiding large drawdowns is critical. It shows the exponential nature of loss recovery.
Why is recovery exponential?
When you lose 50%, you have half your capital. To get back to 100%, you need to double what you have left — that's a 100% return on your remaining capital. The recovery requirement grows exponentially because you're calculating return on a smaller base. Each additional 10% drawdown requires exponentially more recovery.
What's the practical limit?
Most traders struggle to recover from drawdowns exceeding 30-40%. Beyond that, the required returns become statistically unlikely without excessive risk. At 30% drawdown, you need 42.9% recovery — difficult but possible. At 50% drawdown, you need 100% recovery — nearly impossible.
How do I calculate recovery for any drawdown?
Use the formula: recovery = ((100 / (100 - drawdown)) - 1) × 100%. For example, 25% drawdown: ((100 / 75) - 1) × 100 = 33.3%. The tool does this automatically, but understanding the formula helps you internalize the exponential nature.
What if I'm at 25% drawdown?
At 25% drawdown, you need 33.3% recovery — challenging but possible with good trading. This is the upper limit of recoverable drawdowns for most traders. Beyond 25%, recovery becomes exponentially harder. Stop trading if you're approaching 30% drawdown.
Can I recover faster by taking more risk?
No — taking more risk after a drawdown usually leads to further losses. Revenge trading is one of the biggest mistakes. After a drawdown, reduce risk, not increase it. Use proper position sizing (1-2% per trade) and let time and discipline do the recovery work.
What's the difference between this and Drawdown Pain Index?
Capital Recovery shows the exact recovery percentage needed for any drawdown. Drawdown Pain Index categorizes drawdowns into pain levels and shows psychological impact. They're complementary — use Capital Recovery for the math, Pain Index for the psychology.
How does this relate to the One Bad Trade tool?
One Bad Trade shows the impact of a single oversized loss. Capital Recovery shows recovery requirements for any drawdown level. They're related — use One Bad Trade to see how one trade can create a drawdown, Capital Recovery to see how hard it is to recover from that drawdown.
What if I add more capital after a drawdown?
Adding capital reduces the recovery percentage needed, but you still need to recover the lost amount. If you lost $5,000, you need to make $5,000 back regardless of new capital. Adding capital doesn't fix the problem — it just changes the percentage slightly.
How do I prevent needing large recoveries?
Use proper position sizing (1-2% risk per trade). Set a maximum drawdown limit (20%) and stop trading when you hit it. Use stop losses on every trade. Never let small drawdowns become large ones. Prevention is 10x easier than recovery — protect capital from the start.
What's the recovery curve shape?
The recovery curve is exponential, not linear. 10% drawdown needs 11% recovery (almost linear). 20% needs 25% recovery (noticeable asymmetry). 30% needs 43% recovery (significant). 50% needs 100% recovery (exponential). The curve accelerates dramatically as losses increase.
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