Recovery Factor
Total selected-period P&L divided by maximum drawdown; in TradesViz it is the same calculation as RoMaD.
Formula
More Details
What is Recovery Factor?
Recovery Factor measures how many times over your net profit covers your worst drawdown. It's a straightforward resilience metric: the higher the number, the more comfortably your profits have recovered from — and exceed — the worst period you've experienced.
Recovery Factor and RoMaD are exactly the same calculation in TradesViz. Both are non-annualized and divide total selected-period P&L by the absolute maximum drawdown. They are displayed separately because both names are widely used by traders and analytics platforms. For identical accounts, dates, filters, and P&L mode, their values will always match.
Calmar is different in TradesViz because its return component is annualized.
Formula
Recovery Factor = Total selected-period P&L / |Maximum Drawdown|
Where:
- Total selected-period P&L = cumulative realized profit/loss under the active TradesViz filters and P&L mode
- |Max Drawdown| = absolute value of the largest peak-to-trough drawdown
Interpretation
| Recovery Factor | Meaning |
|---|---|
| < 0 | Net loss — system is not profitable |
| 0 – 1.0 | Profitable, but profits haven't fully recovered from the worst drawdown |
| 1.0 – 3.0 | Healthy — profits are 1–3× the worst drawdown |
| 3.0 – 6.0 | Strong — comfortable buffer above worst-case scenario |
| > 6.0 | Excellent — very robust system or small drawdowns |
Why It Matters
The Recovery Factor answers a practical question every trader should ask: "If my worst drawdown happened again right now, would my accumulated profits survive it?"
- Recovery Factor = 1.0 → Another max drawdown would wipe out all profit
- Recovery Factor = 3.0 → Another max drawdown would take only one-third of your profit
- Recovery Factor = 0.5 → Your max drawdown was already twice your total profit — you'd go net negative
A Practical Example
| Period | Equity | Drawdown from Peak |
|---|---|---|
| Start | $10,000 | — |
| Month 3 | $14,000 | — |
| Month 5 | $10,500 | −$3,500 (max DD) |
| Month 8 | $16,000 | — |
| Month 12 | $18,000 | — |
- Total Net P&L = $18,000 − $10,000 = $8,000
- Max Drawdown = $3,500
- Recovery Factor = 8,000 / 3,500 = 2.29
This trader has earned 2.29× their worst drawdown — a solid position that provides a meaningful buffer.
Relationship to Other Metrics
| Metric | Focus |
|---|---|
| Recovery Factor | Total profit vs worst drawdown (simple resilience check) |
| RoMaD | Exactly the same calculation as Recovery Factor in TradesViz |
| Calmar Ratio | Annualized return vs maximum drawdown |
| UPI | Accounts for drawdown duration, not just depth |
| Sharpe / Sortino | Volatility-based, not drawdown-based |
How TradesViz Calculates It
TradesViz computes the cumulative daily P&L equity curve, identifies the maximum drawdown (which is also shown separately with its date), and divides total P&L by the absolute drawdown value. The result is assigned to both Recovery Factor and RoMaD.
How TradesViz Does It Better
- Displayed with Max Drawdown and its date for full context
- Filter by time period, setup, or symbol to see Recovery Factor for subsets of your trading
- Equivalent RoMaD shown alongside it so users can find the metric under either industry name
- Comparative view: See Recovery Factor alongside Calmar and UPI for a comprehensive drawdown risk assessment
- Custom dashboard widget for tracking resilience over time
Where to find it in TradesViz
Example
A trader with $8,000 net profit and a $3,500 max drawdown has a Recovery Factor of 2.29 — they've earned 2.29× their worst loss.