It’s often said that how you deal with your first major loss will define you as a trader. Which route you end up on will depend on your personality type.
Drawdown happens when losses in a trading account outweigh profits over a certain period. If you trade in any kind of volatile instrument, some drawdown is inevitable and is one of the risks associated with putting your money into financial markets.
A poor understanding of risk and money management means novice traders frequently experience severe losses and sometimes a complete loss of their capital.