Drawdown Path With A Defensive Exit & Re-Entry PositionUnderstanding drawdown is an important part of managing risk and evaluating an investment’s path.
Many guides explain the concept, but I wanted a way to visualise drawdown for the security I’m charting and see how a simple exit-and-re-entry rule behaves.
The core idea is simple.
Imagine a stock at $1 that rises to $2, a 100% gain. The peak is now $2. If the price falls back to $1, that is a 50% drawdown from the peak. A 50% gain from $1 gets you to $1.50; you need a 100% gain to return to
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