Finance
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Maximum Drawdown Calculator.
Calculate peak-to-trough drawdown from a user-entered value series.
Set your values
Results update as you type.
FAQs
How does the maximum drawdown calculator work?
Enter the requested values to receive a deterministic result. No live market, tax, or jurisdiction data is inferred.
Use Cases
Assess investment risk
Use the calculator to see the worst peak-to-trough decline in a stock, fund, or portfolio. This helps you gauge if you can stomach the potential losses.
Example: Enter monthly portfolio values to see the largest drop during a market crash.
Compare trading strategies
Evaluate different trading or investment strategies by comparing their maximum drawdowns. A lower drawdown may indicate a less risky approach.
Example: Compare two strategies by entering their equity curves.
Frequently Asked Questions
- What is maximum drawdown?
- Maximum drawdown is the largest percentage drop from a peak to a subsequent trough in a value series, such as an investment's price or portfolio value. It measures the worst loss you could have experienced if you bought at the peak and sold at the trough.
- How is maximum drawdown calculated?
- The calculator scans your entered value series, identifies all peaks and troughs, and computes the percentage decline from each peak to the following trough. The largest of these declines is the maximum drawdown.
- Why is maximum drawdown important?
- Maximum drawdown helps you understand the risk of an investment by showing the worst historical loss. It's useful for comparing investments, setting risk tolerance, and planning for potential losses.
Tips & Common Mistakes
Tips
- Enter values in chronological order (e.g., daily, weekly, or monthly) to get an accurate peak-to-trough analysis.
- Use consistent intervals between values (e.g., all monthly) for meaningful comparisons.
- Include the full time period you're interested in, including market highs and lows, to capture the true maximum drawdown.
- Remember that maximum drawdown is a historical measure; it doesn't predict future losses.
Common Mistakes to Avoid
- Entering values out of order, which can misidentify peaks and troughs.
- Using inconsistent time intervals, making the drawdown calculation less meaningful.
- Ignoring the impact of cash flows (e.g., deposits/withdrawals) if your series includes them, as they can distort the drawdown.
Last updated: August 13, 2026