Drawdown
The decline from an investment's most recent peak to its subsequent trough, in percent — a direct measure of pain endured, and of the gain needed to recover.
A drawdown is how far an investment has fallen from its highest point so far. The maximum drawdown over a period is the worst peak-to-trough decline — a direct measure of how much pain a strategy asked its holder to endure.
Drawdowns matter because recovery is asymmetric: a 50% fall requires a 100% gain to get back to even. Managing the depth of drawdowns — not just chasing return — is central to building a strategy an investor can actually stay with through a full cycle.