// TRADING TERMINOLOGY
What is Drawdown?
The peak-to-trough decline during a specific period for an investment or trading account.
In-Depth Explanation
Drawdown is a measure of risk. It tells you the maximum "pain" your account has suffered before returning to a new high. Managing drawdown is the key to long-term survival.
Practical Example
"If your account goes from £10,000 to £8,000 before rising again, you have suffered a 20% drawdown."
Related Terms
Master the language of risk
Knowing the terms is just the start. Learning how to apply them is where the edge is found.
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