What Percent Gain is Needed to Recover Loss?
One of the biggest lessons that most successful stock traders learn is to cut your losses early. As long as a position is OPEN, it's easy to convince yourself that the loss is on paper and that the stock will eventually recover. Companies do go bankrupt, some stock prices never get back to their original highs. One must also always consider opportunity cost - do you want to hold the stock for over a year to recoup your investment (breakeven) when you could have taken a 50% loss, invested that money into a better stock and be up 150% with a better company.
The chart below is a good reminder on how much a stock must gain back, once it has decreased (lost value) by a given percent.
Example: If you owned AMD at $100/share and the stock fell to $30/share, the stock would have to rise 233% to get back to your original $100/share price.
| Stock Percent Loss | Stock Percent Gain Required to Breakeven |
|---|---|
| -5% | +5.3% |
| -10% | +11.1% |
| -15% | +17.6% |
| -20% | +25.0% |
| -25% | +33.3% |
| -30% | +42.9% |
| -35% | +53.8% |
| -40% | +66.7% |
| -45% | +81.8% |
| -50% | +100.0% |
| -55% | +122.0% |
| -60% | +150.0% |
| -65% | +186.0% |
| -70% | +233.0% |
| -75% | +300.0% |
| -80% | +400.0% |
| -85% | +567.0% |
| -90% | +900.0% |
| -95% | +1900.0% |