How break-even price and recovery gains are calculated
Break-even is the price at which you get out with neither profit nor loss, and it is never simply the price you bought at. Fees on the way in raised what the position cost you, and fees on the way out will reduce what you receive. Break-even sits above your entry price by enough to absorb both.
The more important idea on this page is the asymmetry of losses. A percentage fall and the percentage rise needed to undo it are not the same number, because the fall is measured against your original amount and the recovery is measured against the smaller amount that survived it. Lose half and you need to double what is left to get back to where you started.
That asymmetry compounds savagely at the extremes. A 20% drawdown needs a manageable 25% recovery, but a 90% drawdown needs 900% — a tenfold gain simply to return to the starting point. This is the arithmetic that makes capital preservation matter more than upside capture, and it is the reason a position that is deeply underwater rarely comes back.
Worked example
The recovery gain required after a given drawdown. Each row applies the formula above — the required gain always exceeds the loss, and the gap widens sharply as the loss deepens.
| Input | Value |
|---|
| Down 10% | needs +11.1% to recover |
| Down 25% | needs +33.3% to recover |
| Down 50% | needs +100% to recover |
| Down 75% | needs +300% to recover |
| Down 90% | needs +900% to recover |
The relationship is not linear: tripling the drawdown from 25% to 75% multiplies the required recovery ninefold, from 33.3% to 300%. Fees add to this. Buying 2 units at 2,000 with a 0.5% fee on each side costs 4,020, and the exit fee means you must sell at 2,020.10 rather than 2,000 to break even — a required gain of 1.005% before any profit at all.
How to use this calculator
- Enter the price you actually bought at, or your weighted average if the position was built across several purchases.
- Add the fees paid to acquire the position — they are part of what you must recover.
- Add the exit fee rate, since it is deducted from your proceeds and pushes the break-even price higher.
- For an existing loss, enter the drawdown percentage to see the gain required to recover it.
- Use the asymmetry figure when sizing positions, not after the loss has already happened — that is the only point at which it is actionable.
Frequently asked questions
Why does a 50% loss need a 100% gain?
Because the two percentages are measured against different bases. Falling from 100 to 50 is a 50% loss of the original. Rising from 50 back to 100 is a 100% gain on what remains. The loss is calculated on the larger number, the recovery on the smaller one.
Is my break-even price the same as my buy price?
No, it is always higher. Fees paid to buy increased your cost and fees charged on selling reduce your proceeds, so the exit price has to clear both. On small positions with flat fees the gap can be substantial in percentage terms.
Does this change if I bought at several different prices?
Use your weighted average cost — total spent including fees divided by total quantity — as the entry price. Note that break-even against the average tells you about the position as a whole, and says nothing about whether any individual purchase is in profit.
Should I average down to lower my break-even price?
It does lower the break-even, but that is a mechanical consequence, not a benefit in itself. Averaging down adds capital to a losing position, which increases the amount at risk. It is only sensible if you would buy the asset at that price on its own merits.
How does the asymmetry affect position sizing?
It is the main argument for capping the loss any single position can inflict. Since deep drawdowns need implausible recoveries, limiting exposure so that no one position can produce a catastrophic loss preserves the capital base that future gains have to compound on.
Do taxes affect the break-even price?
They can. If a disposal is taxable in your jurisdiction, the price that leaves you whole after tax is above the pre-tax break-even. Rules differ by country and change periodically, so treat the figure here as pre-tax and confirm the current treatment where you are resident.
This calculator is an educational tool. Results are estimates based on the inputs you provide and do not constitute financial advice. Verify figures with your bank, broker or a qualified advisor before acting on them.