Glossary · Risk & money management
Drawdown
The fall from an account’s peak to its lowest point before a new peak. A 50% drawdown needs a 100% gain to recover.
In practice
An account grows to $12,000 and then falls to $9,000 before recovering. The drawdown is 25%, and it needed a 33% gain from the low to get back to the peak.
Increasing risk to recover a drawdown faster. That makes a deeper drawdown more likely, not less.
Try the drawdown recovery calculator
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