What's your strategy for drawdown recovery?
Recovering a drawdown by trading harder is how accounts die; recovering by trading smaller and slower is how they survive. The recovery plan should exist before the drawdown does.
What's yours?
- how you trade during the drawdown
- the size and rule changes you make
- how you know recovery is working
The drawdown guide explains why slower recovery is faster in the end.
Background: Drawdown and recovery: why a 50% loss needs a 100% gain
Losses and gains aren't symmetrical. See how much you need to recover from a drawdown, what losing streaks do at different risk levels and how to set limits.
How much do you need to gain to recover from a 50% loss?
100%. The gain needed is the loss divided by one minus the loss, so larger drawdowns need disproportionately larger gains.
What is maximum drawdown?
The largest fall in account value from a peak to a later low, before a new peak is reached, usually expressed as a percentage.
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