Drawdown

A drawdown is the peak-to-trough decline in a stock's price from its highest point to its lowest point before recovering. Think of it as how far down an investment drops from its best moment. You'll hear this term when analyzing risk—it tells you the worst-case loss you might have experienced if you bought at the absolute top. Drawdowns matter because they show volatility (how much a stock bounces around) and help you sleep at night knowing what kind of swings to expect. For example, if TechCorp stock hit $100 then fell to $70 before climbing back up, that's a 30% drawdown. Bigger drawdowns mean bigger emotional tests for investors.