Glossary/ Risk
Risk
Drawdown
The fall from a peak in your account to the trough that follows, usually stated as a percentage. The number that decides whether a method is survivable.
Where this comes up
Lessons that use the term in context, which is usually more useful than the definition on its own.
- Sizing a position properly — From capital and stop distance to quantity — the whole calculation.
- The arithmetic of a drawdown — Why a 50% loss needs a 100% gain, and what that means for size.
- Risk of ruin — The probability nobody calculates before they need it.
Nearby terms
Hit rate · Leverage · Position sizing · Reward to risk · Risk of ruin · Slippage