Who is it for?
Users who want to quantify risk before trading Anyone who verifies account and symbol specifications
Risk & Position Sizing
Drawdown & Recovery Percentage Calculator
Calculate account drawdown and the percentage gain required to recover, with formulas, a recovery table, and balance-versus-equity guidance.
FreeNo installationEducational & analytical
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Tool guide
What is drawdown and why is recovery larger than the loss?
Drawdown measures the decline from a prior equity peak to a lower current level. Recovery is asymmetric because the gain is earned on a smaller remaining balance; a 20% drawdown needs a 25% gain to recover.
Logic / formula
Drawdown% = (peak − current equity) ÷ peak; recovery% = peak ÷ current equity − 1.
Read the output
Read drawdown and required recovery together with risk capacity and recovery time.
TT-FT-005 · versioned engine drawdown-recovery@2.0.0 · educational/analytical use; not investment advice.
Full guide, examples, and sources
When should you not rely on it?
Guessed inputs or invalid broker specifications Using it as a profit forecast
Logic, formula and methodology
Drawdown measures the decline from a prior equity peak to a lower current level. Recovery is asymmetric because the gain is earned on a smaller remaining balance; a 20% drawdown needs a 25% gain to recover. Drawdown% = (peak − current equity) ÷ peak; recovery% = peak ÷ current equity − 1.
Peak-to-current drawdown, loss amount, remaining capital, asymmetric recovery gain, recovery-period scenario with return and contributions, 12-period projection, and standard recovery table.
Worked example
Example
Falling from £10,000 to £8,000 is 20%, but recovery requires 25% growth
A 20% fall from £10,000 to £8,000 requires a 25% gain on the remaining capital to return to the peak.
A 20% fall from £10,000 to £8,000 requires a 25% gain on the remaining capital to return to the peak.
How to read the result
The headline number must be read with assumptions and warnings. Out-of-bound values should be corrected before trading.
Read current drawdown together with required recovery. Treat any return or contribution recovery path as a scenario, not as a forecast of the exact recovery date.
What the TupTrader version adds
The value of this version is not cosmetic; the result, assumptions and workflow are connected to the practical capabilities below.
- Underwater curve
- Recovery mountain
- Scenario A/B/C
- Fixed return + contribution scenarios
- New-high state
- Recovery-period table
- Losing-streak impact link
- Save drawdown state
Turn the result into a workflow
Related tool →Cross-check the result with the broker or platform. Record risk in the entry checklist. Record the actual value in the journal after the trade.
Common mistakes and limitations
- Confusing risk with margin or potential profit
- Ignoring costs and rounding
- Using the wrong unit or currency
- A constant periodic-return assumption simplifies reality. The tool does not diagnose why drawdown occurred, detect regime change or estimate the probability of another drawdown.
Frequently asked questions
Why is recovery larger than the drawdown percentage?
Because the gain is applied to a smaller capital base after the loss.
Does adding new money count as performance recovery?
A contribution can restore account equity but should be separated from trading performance.
What drawdown is acceptable?
There is no universal threshold; it depends on risk tolerance, strategy variability and account constraints.
Sources and research method
This guide combines the tool’s versioned specification, the earlier TupTrader educational page and the authoritative sources below. External sources are used for definitions and scientific boundaries, not for signals.
- CME Group — Controlling RiskFixed-percentage risk and the nonlinear relationship between drawdown and recovery.
This tool is for education, scenario analysis and process control. It is not investment advice, a buy/sell signal or a guarantee of future performance.
Recovery math
Drawdown formula and required recovery table
Peak-to-trough drawdown = (peak − trough) ÷ peak × 100. Required recovery is calculated from remaining capital: drawdown ÷ (100 − drawdown) × 100.
| Loss / drawdown | Gain required to recover |
|---|---|
| 10% | 11.11% |
| 20% | 25% |
| 30% | 42.86% |
| 50% | 100% |
Example
If equity falls from 20,000 to 14,000, drawdown is 30%. Recovering the 6,000 loss requires a 42.86% gain on the remaining 14,000.
Balance / Equity
Balance reflects closed trades; equity also includes open P/L. Use one consistent series for peak and trough, and do not mix balance and equity drawdowns.
Next step
After measuring the loss, review the next trade’s risk with the position-size calculator and log the cause and execution quality in the journal.