Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Drawdown definition

A drawdown can be one of two things. It can either be the decline in an asset price or a portfolio value over a specific period from peak to trough or high to low, or the proportion of a pension that a retiree withdraws each year.

Drawdown definition

A drawdown can be one of two things. It can either be the decline in an asset price or a portfolio value over a specific period from peak to trough or high to low, or the proportion of a pension that a retiree withdraws each year.

In the first definition, it is usually quoted as a percentage. It is used as one way to help work out the risk-to-reward of an investment.

In the second definition, drawdown is a critical factor in pension planning and at the moment of retirement. If the drawdown is too high during retirement, then a retiree could struggle late in life, while if drawdown is too low then a retiree may have a lot left over when they die. 

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