In layman's terms, retracement means falling.
To measure whether a fund is excellent or not, in addition to performance, it often involves the maximum withdrawal rate of the fund to test the fund management team's ability to control the risk of market fluctuations.
Return-to-risk ratio, also known as return-to-retreat ratio, is used to measure the comprehensive performance of an investment strategy, and its calculation formula is:
Revenue-risk ratio = annualized rate of return/maximum retracement ratio
Investment should not only pay attention to income, but also pay attention to risk. Numerous professional investors have emphasized that risk control should be put in the first place.
Therefore, a good investment strategy should first only take limited and controllable risks, and then get corresponding benefits as compensation according to the risks taken. The so-called "low risk and low return, high risk and high return" is the truth.