What is the drawdown calculator?
Drawdown is the peak-to-trough equity decline. The deeper the drawdown, the harder it is to recover because gains are calculated on the smaller base.
When to use it
Risk-management planning - a 50% drawdown requires a 100% gain to recover. Knowing the recovery math forces conservative sizing.
Formula
Recovery Required = (1 / (1 − Drawdown%)) − 1.
Worked example
20% drawdown → 25% gain required. 50% drawdown → 100% gain. 80% drawdown → 400% gain.
FAQ
What is a "good" max drawdown?
Top hedge funds run with 8–15% max drawdowns. Retail traders often tolerate 30%+ - but recovery becomes psychologically near-impossible past 40%.
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