Risk Management5 min read
Drawdown Recovery Math: Why 50% Losses Are Catastrophic
The math of drawdown recovery is non-linear. Learn why a 50% loss is not just twice as bad as 25%. The recovery percentages are far steeper than the losses.
The Problem
10% drawdown needs 11% gain to recover. 50% drawdown needs 100% gain. 90% drawdown needs 900% gain.
Practical Rules
Never risk more than 1-2% per trade. Daily loss limit 3%. Weekly loss limit 6%. After 20% drawdown, reduce to 0.5%.
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Disclaimer: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70-80% of retail investor accounts lose money when trading CFDs. Backtesting does not guarantee future results. Always consider whether you can afford the potential loss of your capital.