Why drawdown math is brutal
Losses and gains are not symmetric. A drawdown of 20% needs a 25% gain to recover; a 50% drawdown needs a 100% gain just to get back to break-even. This calculator shows both sides: how a losing streak compounds into a drawdown, and the exact gain needed to recover from it.
The drawdown recovery formula
Recovery gain % = (1 ÷ (1 − drawdown %) − 1) × 100
And for a streak of losses at a fixed risk percentage: Drawdown % = (1 − (1 − risk %) ^ losses) × 100. Because risk is taken from a shrinking balance, ten 1% losses produce a 9.56% drawdown, not 10%. Recovering from it still needs +10.57%.
Drawdown recovery table
| Drawdown | Gain needed to break even |
|---|---|
| 5% | +5.26% |
| 10% | +11.11% |
| 15% | +17.65% |
| 20% | +25.00% |
| 25% | +33.33% |
| 30% | +42.86% |
| 40% | +66.67% |
| 50% | +100% |
| 60% | +150% |
| 75% | +300% |
| 90% | +900% |
Up to about 20%, recovery is roughly proportional. Past 30 to 40%, it bends sharply upward, and that is where accounts stop recovering in practice.
Maximum drawdown vs balance drawdown vs equity drawdown
- Maximum drawdown is the largest fall from a peak to a later low, the headline number in an MT5 Strategy Tester report.
- Balance drawdown only counts closed trades. A strategy that holds losing positions open can show almost none.
- Equity drawdown includes floating losses on open trades. This is the one that blows accounts and breaches prop firm limits. When you compare EAs, always ask for equity drawdown. We explain why in does a zero drawdown EA exist?
What is a good maximum drawdown?
For most traders, keeping maximum equity drawdown under 10 to 15% keeps recovery realistic, at under 18% gain needed. Prop firms typically cap total drawdown at 8 to 12% and daily loss at 4 to 5%, so challenge traders need even less. Use the risk of ruin calculator to check how likely you are to hit that limit at your risk per trade, and the lot size calculator to turn that risk into a position size.
The lesson: protecting capital beats chasing returns. That is the design principle behind Apex Drawdown Zero: cap the drawdown so you never face an impossible recovery.