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What is a Drawdown?

A drawdown refers to how much an investment or trading account is down from the peak before it recovers back to the peak.
Drawdowns are typically quoted as a percentage, but dollar terms may also be used if applicable for a specific trader.
Drawdowns are a measure of downside volatility.
The time it takes to recover a drawdown should also be considered when assessing drawdowns.
A drawdown and loss aren’t necessarily the same thing. Most traders view a drawdown as a peak-to-trough metic, while losses typically refer to the purchase price relative to the current or exit price.

More details in the link below:,peak%20and%20the%20subsequent%20trough

Updated on: 19/09/2022

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