Maximum Drawdown Calculator
Peak-to-trough loss measure.
Calculate maximum drawdown and the recovery percentage needed to climb back to the previous peak after a peak-to-trough loss.
What this tool does
Maximum drawdown measures the peak-to-trough loss on a portfolio, showing the largest percentage decline from a high point to a subsequent low point. The calculator takes your peak portfolio value and trough value to compute the drawdown percentage. It then calculates the recovery percentage—the gain needed from the trough to return to the original peak. Because losses compound asymmetrically, larger drawdowns require disproportionately larger percentage gains to recover. If you provide a recovery target value, the tool estimates the percentage gain required to reach that level from the trough. The result illustrates how drawdown depth and recovery requirements interact, useful for understanding portfolio volatility patterns. This calculation assumes the trough occurs after the peak and does not account for timing, intermediate cash flows, or ongoing market conditions.
Enter Values
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Formula Used
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Calculations or display — let us know.
Disclaimer
Results are estimates for educational purposes only. They do not constitute financial advice. Consult a qualified professional before making financial decisions.
Maximum drawdown measures peak-to-trough loss as a percentage. Critical risk metric beyond simple volatility. 100k portfolio falling to 60k = 40% drawdown. Recovery requires 67% gain (60k × 1.67 = 100k) - drawdowns punish asymmetrically. 50% drawdown needs 100% recovery. 80% needs 400%. This asymmetry is why avoiding large losses matters more than capturing every gain.
Example: portfolio peaked at 200k, fell to 130k (35% drawdown), recovered to 200k. Recovery from 130k requires 53.8% gain. Took 4 years from peak to recovery (typical for severe corrections). Investors who panic-sold at trough locked in 35% loss; those who held got back to break-even after years of stress.
Historical drawdowns: S&P 500 1929-1932: -86% (recovery to 1954 = 25 years). 1973-1974: -48% (recovery 1980). 2000-2002: -49% (recovery 2007). 2008-2009: -57% (recovery 2013). Stocks recover but not always quickly. Bonds reduce drawdowns substantially: 60/40 portfolio worst drawdown 2008: -32% vs -57% all stocks. Diversification matters most when it matters most.
Quick example
With peak value of 200,000 and trough value of 130,000 (plus recovery target of 0), the result is 35.00%. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.
Which inputs matter most
You enter Peak Value, Trough Value, and Recovery Target (optional). Not every input has equal weight. Adjusting one input at a time toward extreme values shows which ones move the result most.
What's happening under the hood
Drawdown = (peak - trough) / peak × 100. Recovery % = (peak - trough) / trough × 100. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.
Using this well
What this doesn't capture
Steady-rate math ignores real-world volatility. Actual returns are lumpy; sequence-of-returns risk matters most in drawdown; fees and taxes drag on compound growth; and behaviour changes in drawdowns can reduce outcomes below the projection. The number represents one scenario rather than a forecast.
££200,000 peak → ££130,000 trough = 35.00% drawdown.
Inputs
This example uses typical values for illustration. Adjust the inputs above to match a specific situation and see how the result changes.
Sources & Methodology
Methodology
This calculator computes maximum drawdown by taking the difference between a peak value and the lowest subsequent trough, then expressing this loss as a percentage of the peak. The formula divides the peak-to-trough decline by the peak value and multiplies by 100. If a recovery target is provided, the calculator also estimates the percentage gain required from the trough to reach that recovery level. The model treats the peak and trough as fixed historical points and assumes no interim cash flows, fees, or timing considerations affect the measurement. Drawdown captures the severity of a decline from a prior high point but does not model the duration of the downturn, volatility patterns, or probability of recovery.
References
Frequently Asked Questions
Why drawdowns punish asymmetrically?
Tolerable drawdown?
Recovery time?
How to reduce drawdowns?
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