Drawdown
Drawdown is the decline from a peak to a low point in an account or strategy, usually shown as a percentage. It measures the worst pain endured along the way.
Drawdown is the drop from a previous high to a subsequent low in the value of an account or strategy, usually expressed as a percentage. If a portfolio falls from a peak by thirty percent before recovering, its maximum drawdown over that stretch was thirty percent. It is the single best measure of how much pain a strategy puts you through.
Drawdown matters more than headline returns for one practical reason: people abandon strategies during deep drawdowns, often at the worst moment. A system that returns a great deal on paper but requires sitting through a brutal decline is only as good as the investor who can actually hold it. Understanding the likely drawdown in advance is what makes a strategy survivable.
This is why Crypto Wealth reports maximum drawdown alongside returns. A smaller drawdown for a similar return means a smoother ride, and a smoother ride is one an investor is far more likely to stay with long enough to see the results.
