Drawdown
The fall from a portfolio's peak to its lowest point after that peak.
Drawdown measures how far an account falls from its highest value before recovering. If a portfolio grows to $60,000 and then dips to $45,000, the drawdown is 25%. Maximum drawdown is the largest such fall in the record and is the single most honest measure of how painful a strategy was to hold.
Two strategies with identical returns can have wildly different drawdowns. The one with the deeper drawdown demanded more nerve, more capital cushion, and more patience from anyone following it. Many investors abandon strategies at the bottom of a drawdown, which converts a temporary loss into a permanent one.
This platform shows drawdown before returns on every strategy page. A return figure without its drawdown is marketing, not information.