Maximum Drawdown Calculator

Maximum drawdown is the largest peak-to-trough decline in the value of an investment or portfolio over a period, expressed as a percentage. You measure it from a high-water mark (the highest value reached so far) down to the lowest point that follows before a new high is made. A max drawdown of 30% means the investment fell 30% from its peak to its worst trough.

It scans your series once, tracking the running peak (high-water mark) at each point. For every point it computes the drawdown as (value minus running peak) divided by running peak, then keeps the most negative result. The deepest decline is the maximum drawdown, and the calculator also reports which peak and trough produced it.

Either works. Use equity values when you have account balances, index levels, or fund prices over time, entered oldest first. Use periodic returns when you have a percentage gain or loss per period, such as 8 for a positive 8% month and -25 for a 25% loss. In returns mode the calculator rebuilds the equity curve by compounding from a base of 1.00, so the drawdown is the same as if you had used the underlying values.

Drawdowns compound geometrically, not by simple addition. A 50% drawdown requires a 100% gain to recover, while two separate 25% drops are easier to climb back from. Max drawdown captures the single worst continuous slide, which is why a deep one-time decline can hurt more than a string of shallow dips.

It depends on the asset and your risk tolerance, so there is no universal threshold. Broad stock indexes have historically seen drawdowns of 50% or more in severe bear markets, while a conservative bond portfolio might stay in the single digits. Compare a strategy's max drawdown against its returns and your own comfort with losses rather than to a fixed number.

No. It is an educational tool that reports a mathematical statistic from the numbers you enter, not financial or investment advice. Past drawdowns do not predict future ones, and you should consult a qualified financial professional before making investment decisions.