Work it out
The starting values are an illustration, not a suggested trade or allocation.
Your inputs are not sent to a server or stored by this calculator.
Worked example
Ten consecutive net losses of 2% of the then-current balance leave about 8,170.73 from 10,000, an 18.29% drawdown requiring about a 22.39% gain to recover.
Define what the percentage includes
The entered percentage represents the entire net loss on each step, including costs. It is applied to the equity remaining before that step. Do not add fees elsewhere to the same simulated sequence.
The default 2% is an illustrative value, not a recommended risk rule. This exercise allows you to inspect another percentage without assuming that fills or costs in a real account will conform to it.
Follow the compounding formula
If starting equity is E, the loss fraction is f, and there are n consecutive losses, remaining equity is E × (1 − f)^n. Drawdown from the starting point is 1 − (1 − f)^n.
The monetary loss gets smaller as equity falls because the percentage is applied to a shrinking base. Losing 2% of current equity ten times is therefore not the same as losing a fixed 200 from a 10,000 account ten times.
Inspect the default sequence
Starting from 10,000, the first 2% loss is 200 and leaves 9,800. The second loss is 196 and leaves 9,604. After ten such losses, the balance is approximately 8,170.73.
Total loss is approximately 1,829.27 and drawdown is 18.2927%. The difference from a simple 20% subtraction comes from resizing the loss amount after every step.
Recovery uses the smaller denominator
The gain needed to return to starting equity is starting equity / remaining equity − 1. In the default sequence it is approximately 22.3881%.
This recovery percentage is a mathematical threshold, not a suggested next-trade target. Trying to force a recovery on a schedule is outside the model. Adding capital would change the account balance without representing trading return.
Separate streak size from streak probability
The tool does not use a win rate and assigns no probability to the entered sequence. Real trade outcomes may be dependent, and the chance of encountering a streak over many trades differs from the chance of one specified sequence.
A deterministic table is useful for seeing the consequences of the assumption. It should not be labeled a risk-of-ruin forecast or a guarantee that the account can survive all market conditions.
Recognize practical limits
The model allows continuous fractional sizing. Real minimum order sizes, minimum fees, execution gaps, leverage, and withdrawals can prevent an exact fixed-fraction path.
A 0% loss leaves equity unchanged. A 100% loss reduces the balance to zero on the first step, after which no finite percentage return on that zero balance restores the starting capital. Very small balances are shown using ordinary computer-number precision.
What this tool does not calculate
- Deterministic continuous-sizing model; no probability estimate or individualized risk advice.
- No deposits, withdrawals, mixed outcomes, liquidation, or additional fees.
- A real loss may exceed a planned fraction because of execution or instrument behavior.
Common questions
Is this a recommendation to risk 2%?
No. The percentage is a hypothetical input. The tool calculates the consequences of the number you choose without assessing whether it fits your circumstances.
Are fees added on top of the loss percentage?
No. The percentage is defined as the total net loss per step, including costs. Adding costs again would double count them.
Does the table show how likely a losing streak is?
No. It models the balance if the entered sequence occurs. It does not estimate probabilities, dependence, or the chance of a streak over a trading history.
Why is the recovery percentage larger than the drawdown?
Drawdown is measured against the starting balance; recovery is measured against the smaller remaining balance. The same lost amount is a larger percentage of the remaining capital.
Sources & method
An original calculation tool built with AI assistance. Its method and limits are documented here, and calculation examples are checked with automated tests.
About Trade Focus Check
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About Trade Focus Check