What Is Drawdown From Highs?
How far a price has fallen from its recent high, in percent.
The Full Definition
Drawdown From Highs measures the gap between the current price and a recent peak. Wealth Catchers measures it from the 52-week high (the highest intraday price in the last 52 weeks, which isn't necessarily the all-time high) and watches two reference levels: 10% and 20% below that high. A 10% decline is often called a correction and a 20% decline a bear market, but reaching a level says nothing on its own about whether a business is worth owning. A lower price can mean a better entry, or it can mean something has gone wrong with the business.
Real-World Example
A stock with a 52-week high of $200 that now trades at $170 is 15% below its high. Its 10% level is $180 and its 20% level is $160.