Questions / Quant trading, Sizing & risk
Recover a drawdown
Wealth falls from 100 to 75. What percentage return on the remaining wealth restores it to 100?
Answer it in the app It's free. You get hints, a second try if you miss, and a follow-up question.
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Answer: 33.33% (1/3)
- The required gain is 25 on a base of 75: 25/75 = 33.33%.
Interview shortcut. Recovery needed = loss/(1 − loss) = 25/75.
In the app this has a follow-up where one thing about the setup changes. Try the follow-up.