Drawdowns are not symmetrical with the gains needed to fix them. A 20% drawdown needs 25% to recover, 50% needs 100%, and 80% needs 400%. That asymmetry is the strongest argument that exists for small risk per trade.
Every profitable system has drawdowns. The number to know in advance is how deep yours typically gets, so that a normal one does not feel like evidence the method is broken.
The mistake it causes: increasing size while under water to recover faster - the fastest known route from a recoverable loss to a closed account.
The recovery table everyone should memorise
| Drawdown | Gain needed to recover |
|---|
| −10% | +11.1% |
| −20% | +25.0% |
| −30% | +42.9% |
| −50% | +100% |
| −80% | +400% |
The asymmetry comes from the gain being calculated on a smaller balance. It is also why the deepest hole you never dig is worth more than any recovery strategy.
The cost nobody prices: time
The percentage is only half the bill. The other half is the months of disciplined trading needed to produce it, during which the temptation to size up and make it back is strongest. That temptation is what turns a 25% drawdown into a 60% one, and it is the real reason professional practice is to reduce size while under water.
Normal, uncomfortable and terminal
Single-digit drawdowns are routine in any system. Ten to twenty percent is uncomfortable but survivable. Past thirty percent, most funded-account programmes have already closed you, and past fifty the maths stops being arithmetic and becomes a career decision. Know roughly where your system sits before you are in one, because a normal drawdown feels identical to a broken system from the inside.
Where deep drawdowns come from
Almost never from one bad idea. Usually from three compounding: oversized positions, several trades that are secretly the same bet through correlation, and revenge trading after the first two. Run your own numbers through the risk of ruin simulator to see the drawdown your settings imply, and price the climb out on the drawdown recovery calculator.
