Maximum drawdown

Maximum drawdown is the largest cumulative fall from a peak to the subsequent trough over a period. It measures the worst blow suffered by someone who bought at exactly the wrong moment, and it is the figure that best predicts whether an investor can stick with a strategy: a portfolio with a 50% drawdown needs a 100% rise just to get back to where it started.

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Definition for informational purposes. It is not financial advice nor a recommendation to buy or sell.