Why a 50% loss needs a 100% gain to get back

Say you start with ₹1,00,000. A rough month takes away half. You now have ₹50,000.

To get back to ₹1,00,000, most people's gut says "I need 50% back". You don't. You need to earn ₹50,000 on ₹50,000. That is a 100% gain, on a smaller amount of money, usually while you are feeling the pressure of the loss.

This is one of the first things I show anyone who is new to trading, because once you see it, you look at stop losses and position size very differently. Play with the slider below before reading on.

How deep is the hole?

Pick a starting amount and a loss. The chart shows the gain you need to get back to zero.

Starting capital (₹) Loss

30%

Money left₹70,000

You need to earn₹30,000

Gain needed to recover42.9%

Why it happens

The loss is measured on the money you had. The recovery is measured on the money you have left, which is smaller. Same rupees, smaller base, bigger percentage. The formula is short:

Gain needed = Loss ÷ (100 − Loss) × 100 A 20% loss needs 20 ÷ 80 × 100 = 25%. A 50% loss needs 50 ÷ 50 × 100 = 100%.

Up 10%, down 10% is not "no change"

The same maths shows up on ordinary days. Start with ₹1,00,000. Gain 10% and you have ₹1,10,000. Now lose 10% and you have ₹99,000, not ₹1,00,000. The order does not matter: down 10% then up 10% also ends at ₹99,000.

Stretch it out. Five rounds of +20% followed by −20% look like an average return of zero. The money tells a different story: ₹1,00,000 becomes about ₹81,537. Big swings cost you even when they seem to cancel out. This is why a calm, steady equity curve is worth more than an exciting one.

Losing streaks are not rare. Plan for them.

Imagine a trader who wins exactly half of their trades. Over 100 trades, the chance of hitting at least 5 losses in a row somewhere is about 81%, and the chance of 6 in a row is about 55%. That is with a fair coin. Nobody's method is better than a coin in every single month.

So the useful question is not "will I have a losing streak?" but "what will a streak do to my capital?" Try it:

Losing-streak simulator

Choose how much of your capital you risk on each trade, then how many losses come in a row.

Risk per trade

1% 2% 5% 10%

Losses in a row

8

Capital left85.1%

Gain needed to recover17.5%

Same streak at 1% risk92.3% left

At 1% risk, ten losses in a row leave about 90% of your capital. Annoying, but you are still in the game. At 10% risk, the same ten losses leave about 35%, and you now need close to a 187% gain to get back. The streak was identical. Only the size of each bet changed.

What you can actually control

• Decide the loss before the trade. Know your exit price and the rupee amount you accept losing, before you enter.
• Keep the risk per trade small. Many traders cap it at 1% to 2% of capital. The position sizing post shows how to turn that into a quantity.
• Do not average down a losing F&O position to "bring the cost down". It quietly raises the risk per trade you had planned.
• Pause after a streak. A fixed rule such as "three losses in a day and I stop" protects you from revenge trades, which is where most deep holes start.

What this does not tell you

This is arithmetic, not a strategy. Keeping losses small does not by itself make anyone profitable, and the examples above ignore brokerage, taxes and slippage, which make recovery harder still. It is also worth knowing the bigger picture: SEBI's own study found that 91%+ of individual traders in equity derivatives incurred net losses in FY 2024–25. Protecting capital comes first because the odds are already tough.