What Is Recovery Factor? Formula, Bands and Real Data
Recovery factor is net profit divided by maximum drawdown: how much return an account produced for each unit of decline it put its owner through. A value of 2.0 means the account earned twice what it gave up at its worst point. Below 1.0 it has not yet earned back the size of the hole it dug.
How it works
Recovery Factor = Net Profit / Maximum Drawdown
The formula is trivial; the units are not. Two versions circulate and they do not agree:
Currency form = Net profit ($) / Maximum drawdown ($)
Percentage form = Total return (%) / Maximum drawdown (%)
Both sides must be measured the same way. Mixing a currency numerator with a percentage denominator produces a figure that looks like a ratio and means nothing.
| Recovery factor | Reading |
|---|---|
| Below 1.0 | The account has not out-earned its worst decline |
| 1.0 – 2.0 | Working, but the reward is close to the risk absorbed |
| 2.0 – 3.0 | Solid, if the history is long enough to have found the real maximum |
| Above 3.0 | Strong — check trade count and account age before believing it |
One caveat outranks the whole table. Recovery factor rises with time on its own: the numerator accumulates as long as the account keeps earning, while the denominator is a historical maximum that only moves when things get worse. A five-year account and a six-month account are not comparable here — the older one has simply had longer to divide by a fixed number.
Why it matters
Profit and drawdown are usually quoted apart, and separately both are easy to present well. Recovery factor refuses to let them be separate. It is the compact form of the question every track record has to answer: was the pain worth it?
It also fills the gaps left by its neighbours. Profit factor compares gross wins to gross losses and ignores sequence, so an account that made everything in one month scores like one that ground upward every week. The Sharpe ratio measures dispersion but not depth. Recovery factor is the only common metric where the worst moment appears explicitly in the denominator.
What the data shows
The figures below describe accounts published on ShowMyTrades, not traders in general. Across the published accounts that have trading history (August 2026), the median time-weighted return is +3.2% and the median deepest drawdown is 9.7%.
Those medians come from different accounts, so they do not give a population median for the ratio. But an account sitting on both would carry a recovery factor of about 0.33 in the percentage form: roughly one unit of return for every three units of decline endured to get it — worth holding next to the convention that anything under 3.0 is unremarkable.
The tail matters too. 38.2% of these accounts have been down more than 20%, and 63.0% are positive over time — so more than a third have a negative numerator. For those the ratio is not low, it is meaningless: dividing a loss by a drawdown produces a number no band interprets.
Where you see it on ShowMyTrades
Recovery factor is not a metric on ShowMyTrades. No panel, chart or widget displays it under that name or any other, and our statistics engine does not calculate one. You compute it in one step from figures the account page does publish, all derived from the platform feed rather than typed in by the owner.
For the percentage form, take Gain from the Account Stats panel and divide it by Drawdown, four rows below it in the same panel. Both are percentages, so the division is valid. Note what each is: Gain is time-weighted return, which strips out deposits and withdrawals, so it cannot be inflated by adding capital to a losing account; Drawdown is the worst equity decline recorded.
For the currency form, Profit in the same panel gives net closed profit and loss, after commission and swap, but we do not publish maximum drawdown as a currency figure, so there is no second number to divide by. Use the percentage form, or rebuild the equity path from the closed trade list, which the trades table offers as a CSV download.
Either way, open the Drawdown chart view beside that panel first. It plots drawdown day by day as bars, showing when the maximum was set and how long the account spent below its peak — the duration the ratio cannot express.
Common misunderstandings
- "Higher is always better." Not across different histories. The ratio grows with age at constant risk, so compare only comparable track record lengths.
- "It is the same as profit factor." Profit factor divides gross wins by gross losses. Recovery factor divides the final result by the single worst peak-to-trough decline.
- "It shows how fast I recover." It shows magnitude, not time — see drawdown for why duration removes more traders than depth.
- "Use DD on Balance for a cleaner denominator." That is the flattering denominator: strategies that never close losers keep balance drawdown small by construction. Prefer the equity figure, and say which you used.
For how the denominator is measured, and why the maximum never falls, see the guide to maximum drawdown.
Related terms
Profit Factor
Profit factor is gross profit divided by gross loss. Below 1.0 an account loses by construction. Here are the bands and the 1.28 median across thousands of accounts.
Drawdown
Drawdown is the peak-to-trough fall in an account's value, in percent. Here is the formula, why it is cumulative, and what thousands of real trading accounts show.
Maximum Drawdown
Maximum drawdown is the deepest peak-to-trough fall an account ever recorded. The formula, the recovery table, and the real spread across thousands of accounts.
Sharpe Ratio
The Sharpe ratio is average return divided by the volatility of those returns. Here is the formula, how we compute it per trade, and why our median is 0.05.