Angie · learn
Max drawdown
The deepest fall from a peak before a new peak was reached. The number that decides whether a strategy is one you could actually hold through.
A fuller explanation of this one is still being written. The definition above is the short answer.
See also
- Calmar ratio — Return measured against the worst loss along the way, rather than against general choppiness. It punishes the single deepest hole.
- Sharpe ratio — Return per unit of volatility. It asks how much turbulence you endured for the gain, so a smoother path scores better than a wild one that ends up level with it.
- ATR — The typical distance a price travels in a day. Used to size stops in the stock's own terms, so a volatile name gets more room than a quiet one.
Educational content, not investment advice. Angie explains how a valuation is built so you can judge it yourself. What you do with that is your call.
