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General TradingU
Ulcer Index
A volatility indicator that measures downside risk by calculating the depth and duration of percentage drawdowns from recent peaks. Unlike standard deviation, which treats upside and downside volatility equally, the Ulcer Index focuses exclusively on the pain of losses, making it particularly useful for risk-averse investors. A higher Ulcer Index value indicates greater drawdown severity and longer recovery times.
Example
“The fund's Ulcer Index rose from 4.2 to 11.8 during the correction, indicating that drawdowns were deeper and lasting longer than in previous pullbacks.”