Risk of Ruin maps drawdown depth, duration and recovery across the asset’s history. It works from the real record rather than from simulation: every past episode is measured for how far it fell, how long the fall ran and how long the recovery took.

What that produces is a single view of the price of getting back to level, assembled from a lot of history. The question is not how jumpy the asset has been, but what owning it has actually demanded of anyone who did.

What it actually measures

Each episode is measured from a peak to its trough and then forward to the point price regained that peak. Depth and recovery time are reported separately, because two declines reaching the same depth can take very different roads back.

The duration of the descent is recorded too, and that is what tells a crash apart from a slow bleed. An identical hole dug in a fortnight and dug across a year and a half are two entirely different markets to have lived through.

The episode you are actually in cannot be plotted like the others

A completed episode is one where price has returned to the peak it fell from. Only then does it have a recovery time, and recovery time is half of what the view is built to report.

The live drawdown has no such figure, because its ending has not happened. It is marked separately for exactly that reason, which means the measure is structurally quietest about the one episode you have to survive. The history is there to be compared against; it cannot be extended to cover you. That is not a flaw to be engineered away, it is the honest shape of the question.

What it does not tell you

It is a census of what has happened and nothing more. A record of past depths sets no floor under the next decline, and an asset can exceed everything in its own history without that history having been wrong.

The sample is also small in the way that matters. Deep episodes are rare by definition, so the part of the record describing the worst outcomes rests on the fewest observations.

And recovery to a former peak is a narrow definition of healing. An asset can return to its old high with a completely different holder base, having destroyed most of the positions that sat through the decline, and the record will show a clean recovery.

How to read it

At the surface. Level with the high-water mark, or close enough. Every descent begins here.

Shallow. An unremarkable dip. Most assets pass a good deal of their lives at this depth.

Correction. The textbook correction depth, and historically fertile ground.

Bear market. Deep enough to earn the name, and unremarkable for anything this volatile.

Catastrophe. Devastating depth. The record beside it shows how long episodes like these needed to mend.

Head for the Risk-Adjusted Returns dashboard, where Risk of Ruin sits with Calmar Ratio, Positive HODL Days and Profit Probability.

Common questions

What does it work from?

Events that actually happened, with nothing modelled. Each past decline is recorded for how deep it went, how long it took to get there and how long it took to mend.

When is a drawdown treated as finished?

One where price has climbed back to the level it started falling from. Anything still in progress has no mending time to report.

Why is the current drawdown marked separately?

Because its ending is unknown, and it should not be drawn as though its story were over.

What separates a crash from a grind?

How long the decline itself ran. Two episodes can reach the same depth by very different routes.

Does the record set a floor?

No. It is a census of what has happened, and an asset can exceed everything in its own history without that history having been wrong.