Drawdown Recovery Calculator | Loss Asymmetry & Ruin Risk

Recovery is asymmetrical arithmetic. A $10,000 paper balance that loses 50% is $5,000. Earning back $5,000 from that $5,000 is a 100% gain. A larger loss needs a larger percentage gain. The required gain is not exponential.

No. Some evaluations use a daily limit and an overall limit, and those numbers are that firm's rules. This calculator does not apply a 5% daily cap, a 10% overall cap, or any other firm rule.

Risk of Ruin is the statistical probability that a trader's account will suffer a drawdown so severe that recovery becomes virtually impossible. According to the Kelly Criterion and Ralph Vince's models, risking more than 2% per trade dramatically spikes the risk of ruin during inevitable distribution clustering of consecutive losses.

A streak of losses can happen in a practice sample. This calculator does not assign a probability to that streak, and it does not say that a 5% or 10% risk per trade is a standard.

Never increase lot sizes to revenge-trade back losses (the 'Martingale trap'). Professional risk protocols mandate cutting risk per trade in half (e.g., from 1% down to 0.5% or 0.25%) to preserve mental clarity and stem account decay until positive expectancy returns.