# 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.

- Canonical URL: https://forextradingcommunity.com/news/drawdown-and-recovery-math/
- Type: Guide
- Published: 2026-09-14
- Updated: 2026-09-14
- Publisher: Forex Trading Community (https://forextradingcommunity.com), FTC Editorial Team

A drawdown is the fall in an account from its peak to its lowest point before a new peak. It decides whether a trader survives long enough for an edge to show, and it behaves in a way many people underestimate.

## Losses need bigger gains to recover

After a loss, the gain needed to get back to the peak is the loss divided by one minus the loss:

- a **10%** drawdown needs an **11.1%** gain
- **20%** needs **25%**
- **30%** needs **42.9%**
- **50%** needs **100%**
- **75%** needs **300%**
- **90%** needs **900%**

Small drawdowns are easy to recover from. Beyond about 30%, the required gain climbs quickly, and traders under pressure to get back to even often raise their risk, which makes the next loss bigger.

## Losing streaks at different risk levels

Every method has losing streaks. Here is what ten losses in a row do to an account when each trade risks a fixed percentage of the current balance:

- **1% per trade**: the account falls about 9.6%
- **2% per trade**: about 18.3%
- **5% per trade**: about 40.1%
- **10% per trade**: about 65.1%

Ten straight losses sound rare, but not for a method that wins 40% of the time. The chance that any particular ten trades all lose is about 0.6%, and across the hundreds of trades an active trader places in a year, a streak that long becomes likely. Risk per trade decides whether that streak is a setback or the end of the account. To turn a percentage into a lot size, see [position sizing](/news/position-sizing-and-risk-per-trade/).

## Rules that keep drawdowns manageable

- **Fix risk per trade** as a percentage of the account, and don't raise it to win back losses.
- **Set a daily or weekly loss limit**, such as three losing trades or 3% in a day, after which you stop.
- **Reduce size in a drawdown.** Some traders halve their risk after a 10% drawdown and restore it at a new account high.
- **Know your method's normal drawdown** from your [journal](/news/how-to-keep-a-trading-journal/) or a backtest, so you can tell an ordinary losing run from a method that has stopped working.

## Leverage and drawdowns

High [leverage](/news/leverage-and-margin-explained/) doesn't change the maths above, but it makes large losses possible in a single trade, and a margin close-out can lock in a loss before a planned stop is reached. [Prop firm evaluations](/news/prop-firm-evaluations-explained/) are built around drawdown rules for the same reason: breach the maximum drawdown and the account is gone. The behavioural side of losing runs is covered in [revenge trading and overtrading](/news/revenge-trading-and-overtrading/).

## Common questions

### 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.

### What does a losing streak do at different risk levels?

Ten losses in a row reduce an account by about 9.6% when each trade risks 1% of the balance, about 18.3% at 2%, and about 40.1% at 5%.

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This article is for information only and is not financial advice. Trading forex and CFDs carries a high risk of losing money.