Volatility

Volatility — the size of an asset’s price fluctuations around its trend. For a diversified portfolio it is not damage but the fee charged for equity-level returns, paid in discomfort; it becomes damage only when a holder sells into it. Its measurement blind spot: it counts up-moves and down-moves equally, which is why max drawdown — the number your stomach actually meets — is tracked separately.

First used in: 1.8 · Risk: what you’re actually paid for