Drawdowns: Falling and Climbing Back
A drawdown is how far something has fallen from its highest point.
The idea
A drawdown is the drop from the highest point something reached down to the lowest point after it. The tricky part is the math, because falling and recovering are not mirror images. If $100 falls 50% to $50, getting back to $100 means gaining $50 on top of $50 — that is a 100% gain, not a 50% one. This is why avoiding enormous falls tends to matter more than chasing enormous gains. 📉
Words to know
- Drawdown
- How far something has fallen from its highest point.
- Peak
- The highest value something reached before it fell.
- Trough
- The lowest point reached during a fall.
- Recovery
- Climbing back up to the old high point.
- Break even
- Getting back to exactly where you started.
Try it — no account needed
True or false? Swipe each card the way you think it goes.
A drawdown is the fall from a high point down to a low point.
In the full lesson
- 1True or false
- 2Work out the number
- 3Make the call
Vine has 107 lessons like this one, each written three ways so a 7-year-old and a 17-year-old both get a version that fits.
Practice with real prices
Real market data, pretend money. Learn how investing actually works without risking a cent.
Start free