Maximum Drawdown Calculator - Portfolio Risk Analysis

Maximum drawdown is the largest peak-to-trough decline in a price or portfolio series before a new peak is made. Risk managers, fund analysts, and individual investors use it to describe how painful a strategy was in its worst decline, which average return and volatility do not fully capture. Two portfolios can have similar annualized returns while one suffered a much deeper drawdown. The calculator reads a chronological list of positive prices separated by commas or spaces. It walks the series once, tracking the running peak. At each point the drawdown is (peak − current) / peak. Maximum drawdown is the largest of those ratios. The reported peak and trough are the values that produced that worst decline, not necessarily the first or last price. If you also enter an initial investment, dollar loss is estimated as investment × maximum drawdown. The formula is MDD = max over t of (Peak_t − Value_t) / Peak_t, where Peak_t is the highest value observed up to time t. That definition is path dependent: rearranging the same prices in a different order can change the answer. Always enter values in time order, oldest first. A series that falls from 110 to 85 after making a 110 peak has a 22.73 percent drawdown even if it later recovers. Maximum drawdown is not the same as a one-day loss, standard deviation, or value-at-risk. It ignores how long the decline lasted and whether the investor added cash, withdrew cash, or rebalanced. It also treats every observation equally, so a weekly series and a daily series of the same investment can differ. Using prices rather than total-return values omits dividends; using a single fund share price omits cash held outside the fund. Use the result as a stress check when comparing strategies, sizing a position, or explaining historical risk to a client. A 30 percent historical drawdown does not cap the next decline. Markets can fall further than any sample you paste in. The optional dollar figure scales the percentage to a starting balance; it is not a mark-to-market statement of a specific account. Combine drawdown with return, liquidity needs, and your ability to stay invested before judging a strategy.