Risk
The decline from an account peak to its subsequent low, usually expressed as a percentage.
Recovery is not symmetrical with loss. A 10% drawdown needs roughly 11% to recover, a 50% drawdown needs 100%, and an 80% drawdown needs 400%.
That asymmetry is the whole argument for small fixed risk — avoiding a deep drawdown is far easier than climbing out of one.
Taught in
Why Risk Comes FirstRisk Before Anything ElseLosses do not scale the way people assume. Understanding that changes how much you are willing to put on a single idea.
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