Volatility drag
Risk & psychologyAlso called: Variance drain
The amount that variability alone removes from a compounded return, approximately σ² ÷ 2 per period.
In plain terms
Why a series averaging plus and minus ten per cent loses money. It rises with the square of variability, so halving position size halves the average return and quarters the drag — and it disappears entirely if each bet stakes a fixed rupee amount rather than a fraction of the balance.