Why is it challenging to recover your investment after significant losses? Let's break it down. If you lose 3% of your investment, you need to earn back 3.09% to break even. However, if you lose 30%, you need to gain 42.87% to recover.

Consider this example: if you start with 100,000 yuan and lose 3% in the first trade, your balance drops to 97,000 yuan. To get back to 100,000 yuan, you need to make a 3.09% gain on the remaining amount. But if you lose 30%, your balance falls to 70,000 yuan. To recover from 70,000 yuan to 100,000 yuan, you need a 42.87% gain, which is significantly harder to achieve.

This recovery not only requires more time but also depends on encountering rare, strong market conditions. The likelihood of such favorable conditions is low, making it even more challenging to bounce back from substantial losses. Understanding these dynamics is crucial for making informed investment decisions and managing risks effectively.

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