Chart Caption:

The Pain Index measures the average level of "pain" an investor experiences while holding an asset.
- How long does the loss last?
- How consistently the investor experiences drawdowns?
- The level of "stress" when holding an ETF?
Unlike Volatility, which only focuses on upward and downward fluctuations, the Pain Index focuses only on periods of losses (drawdowns).
Examples:
* ETF A drops 3% and then recovers immediately ⇒ Low Pain Index.
* ETF B drops 20% and takes 6 months to recover ⇒ Very high Pain Index.
The Pain Index reflects the "discomfort" an investor experiences while holding an asset.
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The Ulcer Index is an index developed by Peter Martin in 1987 to assess the actual risk of an investment portfolio.
The Ulcer Index only calculates the decline from the peak (Drawdown). It measures the depth of the drawdown and the duration of the drawdown.
This reflects the question, "How severely has the portfolio been damaged?"
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Evaluating ETFs through performance:
1/ Low Pain Index and low Ulcer Index -> Best quality ETFs, shallow drawdown and quick recovery ($IBIT, $FBTC, $ARKB).
2/ High Pain Index and high Ulcer Index -> Deep, prolonged drawdown, high volatility; suitable for investors with high risk tolerance ($SOL ETFs and some Altcoin ETFs).