How do you calculate maximum drawdown?
Maximum drawdown equals trough value minus peak value, divided by peak value. It is usually shown as a negative percentage.
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Drawdown Calculator
Calculate peak-to-trough loss, current drawdown, recovery needed, and distance to a new high, then move into stock risk pages, benchmark comparisons, portfolio risk, and drawdown methodology.
Downside path risk
Calculate drawdown and recovery
Results use your peak, trough, and current value inputs. They describe a scenario path, not a forecast.
Maximum drawdown
-28%
Meaningful downside stress
Dollars lost
$28,000
Recovery needed
38.89%
Current drawdown
-15%
Return to new high
17.65%
Recovered from trough
46.43%
Peak value
$100,000
Formula
Drawdown = (trough value - peak value) / peak value
Recovery needed = (peak value - trough value) / trough value
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Maximum Drawdown research network
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Understand drawdown alongside return, volatility, and Sharpe ratio.
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Pair drawdown with Sharpe so downside pain and volatility efficiency are both visible.
ContinueHow the drawdown calculation works
Drawdown measures the loss from a prior peak to a later trough. It complements Sharpe ratio because it describes the path investors had to endure, not only average volatility.
Input definitions
- Peak value
- The high-water mark before the decline.
- Trough value
- The lowest value after the peak.
- Current value
- The current value used to calculate current drawdown and distance to recovery.
Continue with AlgovestIQ
Portfolio Maximum Drawdown
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Drawdown calculator FAQ
Why is recovery needed larger than the drawdown?
Losses and gains are asymmetric. A 50% drawdown requires a 100% gain from the trough to return to the original peak.
Is drawdown the same as volatility?
No. Volatility measures return variability, while drawdown measures the worst peak-to-trough loss path.
Are drawdown calculator results forecasts?
No. The result is a scenario calculation from the peak, trough, and current values you enter.