Drawdown Recovery Calculator
The gain needed to recover from a drawdown, and roughly how many trades it takes at a given expectancy and risk.
- Gain needed to recover
- 17.6%
- Trades at that expectancy
- About 81
How it works
Losses and gains are not symmetrical. A 20 percent loss needs a 25 percent gain to recover; a 50 percent loss needs 100 percent. The calculator shows the gain for any drawdown, and, given your expectancy in R and your risk per trade, estimates how many trades of average result it would take to get back to the peak.
The estimate assumes every trade earns the average, which real trading does not, so treat it as an order of magnitude. The point it makes is that keeping drawdowns shallow is worth more than any single winning trade.
The formula
Gain needed = Drawdown / (1 - Drawdown); Trades = ln(1 / (1 - Drawdown)) / ln(1 + Expectancy x Risk%)
Worked example
A 15 percent drawdown needs a 17.6 percent gain. At an expectancy of 0.2R and 1 percent risk per trade, each trade earns 0.2 percent on average, and recovery takes about 82 trades.
A 40 percent drawdown needs a 67 percent gain; at the same expectancy that is about 255 trades, which is why a maximum loss limit belongs in every plan.
Frequently asked questions
What expectancy should I enter?
Your own, from a journal of at least fifty trades: win rate times average win in R minus loss rate times average loss in R. If you do not have one yet, 0.1R to 0.3R is a plausible range for a working retail strategy.
Results are arithmetic on the figures you enter and reference exchange rates; check contract sizes and pip values against your broker's specification. General education, not advice.