In investment and trading, controlling principal drawdown is crucial, as recovering to the original level after each decline requires a larger increase. For example, if account funds decrease by 30%, we need to increase by 42.86% to break even, while a 50% drop requires a 100% increase to recover. This relationship becomes even more pronounced as the drop percentage increases: for instance, a 70% drop requires a 233.33% increase, and a 90% drop requires a 900% increase to break even.

This means that larger drawdowns significantly increase the difficulty of recovering funds. Reasonable risk control and principal protection strategies can effectively avoid deep drawdowns, thereby increasing survival ability in the market. This is why many top traders emphasize the importance of stop-loss and position management. Keeping drawdowns within a controllable range is key to long-term survival and growth. Specific attention can be given to the table below.

In trading, controlling principal drawdown is essential. Here is a simple logic: the larger the drop, the larger the required increase to break even.

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For example, when the account drops by 50%, a 100% increase is required to break even, while a 90% drop requires a 900% increase!

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This is why risk control is a "matter of life and death" for every trader. Effective stop-loss strategies and position management can prevent deep drawdowns, allowing you to go further in the market. Always remember: survive first, and then you can win. #RiskControl #InvestmentRecovery #TradingStrategy #StopLoss #WealthManagement