Why losses outweigh gains
Down 50% needs up 100%
Lose half and you have half left. To get back to where you started, that half has to double. Losses and gains aren't symmetric: the deeper the hole, the steeper the climb out.
The climb gets steep fast
Down 10% needs 11% to recover. Down 25% needs 33%. Down 80% needs 400%. Past a certain point, getting back to even stops being a plan and becomes a hope.
Bitcoin has done it too
From November 2021 to November 2022, Bitcoin fell about 77%. Getting back needed a gain of more than 300%. Buyers at the top waited until March 2024 to be even again.
Which is why small losses matter
A loss cut at −10% leaves an 11% climb. Left to run to −50%, it leaves a 100% one. A stop-loss isn't only about this trade. It keeps the next ones possible.
Check yourself
Your account drops from $10,000 to $7,500. What gain takes you back to $10,000?
- 25%
- 33%
- 50%
Show the answer
33% — $2,500 on $7,500 is a third. The 25% you lost was measured from a bigger number than the one you now have to grow.