> For the complete documentation index, see [llms.txt](https://cicada-finance.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://cicada-finance.gitbook.io/docs/faq/why-is-the-reported-maximum-drawdown-only-1.205.md).

# Why is the reported maximum drawdown only 1.205%?

The reported maximum drawdown of approximately **1.205%** was measured over the full operating period of the underlying strategy.

The strategy is designed around a **market-neutral capital allocation framework**, rather than directional exposure to crypto assets. During periods of elevated volatility, including the **October 10 / October 11 liquidation events** and broader market sell-offs, the strategy experienced limited impact.

Most of the observed drawdown was primarily related to **execution costs**, including trading fees, slippage, and bid-ask spreads during position building, arbitrage execution, rebalancing, and position reduction. In practice, this type of drawdown is closer to **initial ramp-up and execution cost** rather than directional market loss.