Drawdown Definition

Drawdown is the decline in value of an account or investment from its highest point to a subsequent low point.

What is Drawdown?

Drawdown is typically expressed as a percentage and is a key measure of downside risk in trading and investing.

Managing drawdown is central to risk management, as larger drawdowns require proportionally larger gains to recover.

An account that falls from $10,000 to $8,000 before recovering has experienced a 20% drawdown.

Day trading is a strategy where positions are opened and closed within the same trading day.

A dealing desk is a broker execution model where client orders are processed internally rather than sent directly to external liquidity providers.

A debenture is a type of unsecured bond backed only by the general creditworthiness of the issuer rather than specific collateral.