Drawdown is asymmetric.
A 50% drawdown needs a 100% gain to recover. See the full curve.
INPUTS
%
How far below peak. 20 = a 20% drawdown.
$
For the dollar example below.
TRY ONE
RESULT
Gain needed to recover25.0%
Account at trough$80,000
Back to peak$100,000
0% DD35% DD70% DD
HOW IT WORKS
Drawdowns hit symmetrically — gains compound back asymmetrically. The math: recovery = drawdown ÷ (1 − drawdown). A 10% drawdown needs 11.1% to get even. 20% needs 25%. 50% needs 100%. 80% needs 400%. This is the asymmetric tax compounding pays: each marginal point of drawdown costs disproportionately more to climb back. It's why "cut losers, ride winners" isn't folk wisdom — it's the only sustainable arithmetic.
FAQ
Why does a 50% drawdown need 100% to recover?
Multiplicative math. A 50% loss takes $1 to $0.50. Getting back to $1 requires doubling — a +100% return. The recovery curve is nonlinear: each marginal point of drawdown costs disproportionately more on the way back.
What is the practical maximum drawdown?
For active traders, 20% is rough but recoverable. 30%+ starts to break psychology. 50%+ is the wall — many traders close out emotionally before they ever make the math back.
Does this apply to all assets?
Yes — the math is universal. Stocks, options, crypto, a leveraged forex account: a 40% drawdown anywhere needs the same 66.7% gain to recover.
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