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RECOVERY MATH

After 50% loss, 100% gain is required to get back to break-even.

Published by The Retail Trader · JUL 31, 2026 · Risk Management

Recovery Math — After 50% loss, 100% gain is required to get back to break-even. Therefore, avoiding big losses is more important than avoiding big losses.

WHERE THIS FITS IN

This term comes under Risk Management, in the section "ACCOUNT-LEVEL RISK". The survival of the entire account depends on numbers, not just one trade:

RELATED TERMS TO READ

Other terms in this group — understanding them together is more useful:
• Position Sizing
• Risk Per Trade
• Capital Allocation
• Exposure
• Leverage
• Margin Call
• Max Daily Loss
• Drawdown
• Max Drawdown
• Risk of Ruin

To read the entire group and all its examples at one place, see the journal "RISK MANAGEMENT: DICTIONARY OF AVOIDANCE" - this term has been taken from there.

This entry is for educational purposes only and is not a recommendation to buy or sell. Exchanges change charges, margins, lot sizes and expiry rules from time to time, so verify any figures with your broker or exchange.

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