Drawdown

Drawdown is a measure of the decline from a peak value to a trough value in the price of an asset or portfolio over a specific period. It is expressed as a percentage. For example, if a portfolio peaked at $100,000 and dropped to $60,000, the drawdown would be 40%. Maximum drawdown (the largest peak-to-trough decline) is a key risk metric used by traders and fund managers to evaluate the worst-case scenario of an investment strategy.