Down 10%, you shrug. You need 11% to get back — no big deal. That intuition is the trap. Because the further you fall, the gap between what you lost and what you need to recover stops being small and starts being the thing that ends accounts.
I keep this table taped to the top of my trading notes. It's just one formula — gain needed = L ÷ (1 − L) — but it's the most honest thing I've ever put in front of myself.
The recovery table
| You lose | Gain needed to break even | Feel |
|---|---|---|
| −5% | +5.3% | Barely notice |
| −10% | +11.1% | Annoying, easy |
| −20% | +25% | Now it's a project |
| −33% | +49.3% | Half your money to fix a third |
| −50% | +100% | You must double to break even |
| −70% | +233% | Practically over |
| −90% | +900% | A different account entirely |
Look at the jump between −33% and −50%. Sixteen points of extra loss adds fifty points to the required recovery. The curve isn't a slope, it's a wall — and past the middle of the table it goes vertical fast.
Now add leverage, because that's where it actually happens
Nobody loses 50% of their account on a spot BTC dip. They lose it because they were leveraged. Leverage multiplies the account impact of every price move, so the recovery table applies to a move a fraction of the size:
| Leverage | Price move against you | Account hit | Account gain to recover |
|---|---|---|---|
| 2× | −10% | −20% | +25% |
| 5× | −10% | −50% | +100% |
| 10× | −5% | −50% | +100% |
| 20× | −5% | −100% | liquidated |
At 10× leverage a 5% wick — an ordinary Tuesday in crypto — halves your account. That single ordinary candle just handed you the +100% recovery problem. This is the real reason high leverage kills: not the liquidation itself, but the recovery burden it leaves on the survivors who got out at −50%.
The number that made me believe this
I ran a big GPU backtest across a pile of pairs, and one microcap came back looking like a dream: 96% win rate, profit factor 3.47. On paper, unbeatable. But the same run reported its worst-case excursion — how far underwater the average position went before recovering — at −14.2%, propped up by a 64.8% rate of averaging down into the pain.
Run that −14.2% through the recovery formula: you need +16.6% to climb back out. One of those bad holds erased more than several winning trades made. The 96% win rate was real. It was also irrelevant, because the shape of the losses did all the damage. A strategy can be right almost every time and still be one gap-down away from the vertical part of the table.
My own paper bots taught me the same lesson with smaller numbers and my real money on the line. Five systems, 81 trades, a 15% net win rate, and a combined result of −$0.567. Not a blow-up — but every one of those small drawdowns needed slightly more than itself to undo, and that slow asymmetry is exactly why grinding back is harder than falling.
What I actually do with this
- Cap the single-trade loss before I care about the win rate. If a setup can't cap the downside near −10% or better, the win rate doesn't matter — one deep loser resets the account.
- Size leverage off the account hit, not the price move. I ask "what account drawdown does a normal 5% move produce here," not "what's my leverage." At 10× the answer is −50%, and I'm not signing up for the +100% homework.
- Cut early, every time. −5% needs +5.3%; that's recoverable in a day. I never let a "it'll come back" turn a −5% into the −33% that costs half my money to repair.
- Check the recovery target the moment I'm underwater. Seeing "+49%" next to a −33% drawdown kills the hopium faster than any pep talk.
→ Calculate your exact recovery target · → Loss recovery calculator · → Learn the math
FAQ
Why does a 50% loss need a 100% gain?
The gain is calculated on the smaller balance left after the loss. $1,000 down 50% is $500; doubling the $500 (+100%) gets you back to $1,000. Formula: gain needed = L ÷ (1 − L).
What is the loss recovery formula?
Gain % needed = L ÷ (1 − L). A 20% loss needs 0.20/0.80 = 25%; a 33% loss needs ~49%; a 50% loss needs 100%; a 90% loss needs 900%.
How does leverage change the math?
Leverage multiplies the account impact of a price move. At 10× a 5% adverse move is a 50% account drawdown, which then needs +100% to recover. The price barely moves; the recovery burden is huge.
Small loss early or hold and hope?
Small early. A 5% loss needs only 5.3% back; a 10% loss needs 11.1%. Every extra percent of drawdown makes the required recovery grow faster than linearly, so holding a loser compounds against you.
How do I calculate my own recovery target?
Use the drawdown recovery calculator: enter your current drawdown and it returns the exact gain needed to break even, plus how long that takes at a given monthly return.