Drawdown Formula

The mathematical formula for calculating maximum drawdown and recovery requirements.

The Formula

Drawdown% = (Peak - Trough) / Peak x 100%
Recovery% = 100 / (100 - Drawdown%) x 100% - 100%

Worked Example

Drawdown Example

Account peak: $10,000, Trough: $7,000
Drawdown = ($10,000 - $7,000) / $10,000 x 100% = 30%
Recovery needed = 100 / (100 - 30) x 100% - 100% = 42.86%
You need a 42.86% gain to recover from a 30% drawdown

Python Implementation

from gfil_calculators.position_size import calculate_recovery_needed
result = calculate_recovery_needed(30)
print(f"Recovery needed: {{result['gain_percent']}}%")

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