Drawdown recovery calculator
See the gain needed to get back to even.
Calculator
Worked example
An account that has fallen from its peak and then earns the same return every period until it is back to even. These are the calculator's default inputs and the result it returns for them.
| Drawdown | 20% |
|---|---|
| Return per period | 5% |
| Starting balance | $10,000 |
| Required gain | 25.0% |
| Balance after loss | $8,000 |
| Time to recover | 5 periods |
Recovery accelerates only if the return repeats without another drawdown.
Questions
- Why does recovery need a bigger gain than the loss?
- The gain is earned on a smaller balance. After a 50% drawdown you need a 100% gain to get back to where you started.
- How do I read time to recover?
- It is the number of periods needed at your return per period, compounding on the balance after the loss. It assumes the return repeats and no new drawdown happens.
- What is a common mistake?
- Raising risk to win back losses faster. Larger size also makes the next drawdown deeper, which pushes the required gain up further.