How it is calculated
After a loss of D%, what is left is (100 − D)% of the peak. To get back, that smaller balance has to grow by D ÷ (100 − D).
The time to recover assumes the same return every month: months = ln(100 ÷ (100 − D)) ÷ ln(1 + monthly return).
A losing streak compounds: each loss takes your risk percentage of what is left, so 10 losses at 2% cost 1 − 0.98¹⁰ ≈ 18.3%, a little less than 20%.
Gain needed = D ÷ (100 − D) × 100% · Streak drawdown = 1 − (1 − risk)ⁿ
FAQ
Why does a bigger loss need a much bigger gain?
The gain is earned on a smaller balance. After a 20% loss you need 25%; after 50% you need 100%; after 75% you need 300%. That curve is why most risk rules aim to stop losses well before 30%.
What drawdown is acceptable for an EA?
It depends on what you can sit through without switching the EA off at the worst moment. Many traders treat 20–30% as the upper end. Size the account so the largest backtest drawdown, with a margin on top, stays under the number you can live with.
How many losses in a row should I plan for?
More than you have seen. A strategy that wins 50% of the time will produce 7 or more losses in a row at some point over a few hundred trades. Enter that streak here to see what it costs at your risk.