drawdown strategies

Drawdown strategies are methods used by investors to limit potential losses in their investment portfolios. They focus on managing the decline in value from a peak before recovery, helping investors avoid large, damaging downturns. Techniques include setting predefined loss limits (stop-loss orders), diversifying assets to spread risk, and adjusting positions based on market conditions. The goal is to control risk exposure, preserve capital, and maintain confidence during market fluctuations, ensuring that a temporary decline doesn't lead to significant financial harm.