Drawdown maths nobody enjoys

[Shadow Trader]

Losses are asymmetric. A fifty percent drawdown requires a hundred percent gain to recover. A twenty percent drawdown needs twenty-five percent. A ten percent drawdown needs about eleven.

That asymmetry is why risk control matters more than clever entries. Deep holes are brutally hard to climb out of, and the time needed grows with the size of the hole.

Consider two scalpers with the same edge. One risks 0.5 percent per trade, the other 3 percent. A run of ten consecutive losses, which happens even with a good system, costs the first about 5 percent and the second around 26 percent. The first barely notices. The second faces a long recovery and probably a damaged mindset.

Streaks are normal. With a 60 percent win rate, the odds of seeing at least five losses in a row over a few hundred trades are high. Planning for that streak before it happens is the difference between surviving and blowing up.

What's the maximum drawdown the account can tolerate, and which risk per trade follows from that?