Question 1

What is drawdown in trading?

Accepted Answer

Drawdown is the percentage drop in capital from a peak to a trough before recovering. It shows how far a portfolio has fallen from its highest value.

Question 2

How do you calculate recovery from a drawdown?

Accepted Answer

Formula: Recovery % = Drawdown ÷ (100 − Drawdown) × 100. Example: a 50% drawdown needs 100% recovery to get back to the starting capital.

Question 3

How much profit is needed to recover from a 50% loss?

Accepted Answer

If capital drops 50%, you need a 100% gain on the remaining capital to get back to even, because recovery is calculated from the smaller remaining base, not the original capital.

Trading Drawdown & Recovery Calculator