Drawdown

Dictionary Says

Definition of 'Drawdown'

The peak-to-trough decline during a specific record period of an investment, fund or commodity. A drawdown is usually quoted as the percentage between the peak and the trough.
Investopedia Says

Investopedia explains 'Drawdown'

A drawdown is measured from the time a retrenchment begins to when a new high is reached. This method is used because a valley can't be measured until a new high occurs. Once the new high is reached, the percentage change from the old high to the smallest trough is recorded.

Drawdowns help determine an investment's financial risk. Both the Calmar and Sterling ratios use this metric to compare a security's possible reward to its risk.

Articles Of Interest

  1. An Introduction To Managed Futures

    Their inverse correlation with stocks and bonds make these alternative investments worth getting to know.
  2. No Forex Strategy Of Your Own? Try Mirror Trading

    There are many advantages to trading a mirror strategy, yet markets are dynamic, and regardless there is always a risk of losses.
  3. Forex: Should You Be Trading Trend Or Range?

    In FX, it's not the price environment that decides this for you. Learn the differences to see which you prefer.
  4. How Risky Is Your Portfolio?

    Find out how you could be subject to larger losses than you think.
  5. Learn The Lingo Of Private Equity Investing

    Because of the non-public nature of private equity, it can be difficult to the learn the lingo. We break it down here.
  6. A Trader's Guide To Using Fractals

    This reversal pattern can make sense of the seeming randomness of market movements and improve your trading.
  7. Tales From The Trenches: A Simple Bollinger Band® Strategy

    Spot extreme short-term price drops and profit on the rebound.
  8. How Interest Rates Affect The Housing Market

    Understand how rate changes can affect home prices, and learn how you can keep up.
  9. Low Expense Top Performing ETFs

    A technical look at the four ETFs that rank highest for five-year performance, lowest expense ratio and total net assets.
  10. Break Into Forex In 12 Steps

    Learn how to get started in forex trading.
comments powered by Disqus
Marketplace
Hot Definitions
  1. Zomma

    An options greek used to measure the change in gamma in relation to changes in the volatility of the underlying asset.
  2. Yield Elbow

    The point on the yield curve indicating the year in which the economy's highest interest rates occur. The yield elbow is the peak of the yield curve, signifying where the highest interest rates occurred.
  3. Xenocurrency

    A currency that trades in markets outside of its domestic borders.
  4. Wanton Disregard

    A standard of severe negligence. Wanton disregard is a very serious accusation that indicates that a person behaved extremely recklessly.
  5. Ultra ETF

    A class of exchange-traded funds (ETF) that employs leverage in an effort to achieve double the return of a set benchmark.
  6. Toehold Purchase

    A purchase of less than 5% of a target company's outstanding stockmade by an acquiring company. A toehold purchase of just under 5%, while not a significant stake in a firm, allows the shareholders a "toe-holds" grip on the company and its decision making.
Trading Center
http://sp.fastclick.net/ad/tr/10858-64082-15546-0?mpt=521a454e696d3de46113c0a5837c15a3