Forex Money Management
| Amount of Equity Lost | Amount of Return Necessary to Restore to Original Equity Value |
| 25% | 33% |
| 50% | 100% |
| 75% | 400% |
| 90% | 1000% |
Figure 1 - This table shows just how difficult it is to recover from a debilitating loss.
Note that a trader would have to earn 100% on his or her capital - a feat accomplished by less than 1% of traders worldwide - just to break even on an account with a 50% loss. At 75% drawdown, the trader must quadruple his or her account just to bring it back to its original equity - truly a Herculean task!
Practicing money management is so that you can take a certain amount of losses while maintaining a reasonable amount to stage a comeback.
