How much you need to make it back
Fall 20% and a 20% gain does not bring you back. It takes 25%. The further you fall, the faster that gap widens.
Your numbers
What that gives you
Gain needed to get back
25%
- How far you have fallen
- 20%
- Amount you are short by
- ₹1,00,000
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How this works
When your capital falls, the next gain is worked out on the smaller amount. That is the whole of it, and it is why recovering takes more than it looks like it should.
Say you started with 5,00,000 and fell 20%. You now have 4,00,000. A 20% gain on 4,00,000 is 80,000, which takes you to 4,80,000 — still 20,000 short of where you began. To actually get back you need 25%.
The formula is the fall divided by what is left: loss ÷ (1 − loss).
This one connects to
Weeks of profit, then one day takes the month away
What this does not say: This is arithmetic about your own capital. It says nothing about whether a fall will be recovered, or when, or in what.