What is maximum drawdown?

Maximum drawdown (MDD) is the largest peak-to-trough decline in portfolio or account value over a specified period, expressed as a percentage. It represents the worst loss an investor would have suffered if they bought at the peak and sold at the trough.

Why is the recovery factor larger than the drawdown percentage?

Because the recovery gain is calculated on a smaller base (the trough value). For example, a 50% drawdown requires a 100% gain to recover. The deeper the drawdown, the disproportionately larger the required recovery.

What is a good maximum drawdown for a trading account?

This depends on strategy and risk tolerance. Conservative strategies typically target drawdowns under 10–15%. Aggressive strategies may accept up to 30–40%. Drawdowns above 50% are considered extreme as the required recovery exceeds 100%.

How is the recovery factor different from the drawdown percentage?

The drawdown percentage measures the loss from peak as a fraction of peak capital. The recovery factor (sometimes called the recovery percentage) measures how much the trough capital must grow — as a percentage of the trough — to return to the peak. Always recovery factor > drawdown % for any drawdown > 0%.

Can I enter multiple equity values to find max drawdown?

Yes. Use the Series tab and paste or type a comma-separated or line-separated list of equity values. The calculator will scan every peak-to-trough combination and return the global maximum drawdown.

What does a drawdown of 0% mean?

A 0% drawdown means the trough equals the peak — no loss occurred. This is only typical if you have a single data point or the account never went below its starting value.

Is this calculator for retirement pension drawdown?

No. This tool calculates peak-to-trough equity losses and recovery factors for trading accounts and investment portfolios. For retirement decumulation schedules or estimating how long savings will last under regular withdrawals, use a retirement withdrawal or pension decumulation calculator.

Maximum Drawdown Calculator

Enter your peak and trough equity values to instantly calculate drawdown amount, drawdown percentage, and the recovery factor needed to break even.

Peak Equity

Trough Equity

Enter values and click Calculate to see results

Summary

A drawdown measures the decline from a peak equity value to a subsequent trough, expressed as a percentage. This calculator is designed for trading accounts and investment portfolios to determine peak-to-trough risk and recovery requirements (note: for retirement decumulation and distribution timelines, use a retirement withdrawal calculator). It takes your peak and trough balance, then returns the absolute drawdown, drawdown percentage, and the recovery factor — the gain required on the remaining capital to return to the original peak. It also shows a series breakdown if you enter multiple equity points.

How it works

Enter the peak equity value (the highest account balance or portfolio value).
Enter the trough equity value (the lowest point after the peak).
The calculator instantly shows the absolute drawdown in currency units.
Drawdown percentage = (Peak - Trough) / Peak × 100.
Recovery factor = the percentage gain needed on trough equity to reach the peak again.
Optionally enter a series of equity values to find the maximum drawdown across the entire series.

Use cases

Evaluate risk in a trading strategy by reviewing its historical maximum drawdown.
Understand how much gain is needed to recover from a losing streak.
Compare drawdown metrics across different investment portfolios.
Monitor live account health by tracking drawdown from the high-water mark.
Present risk metrics to investors or compliance teams.
Set drawdown stop-loss thresholds for automated trading systems.
Calculate worst-case scenario drawdown before deploying capital.
Back-test manual or algorithmic strategies for drawdown tolerance.

Frequently Asked Questions

Last updated: 2026-06-04 · Reviewed by Nham Vu

Maximum Drawdown Calculator

Use the Maximum Drawdown Calculator

Calculation Breakdown

Summary

How it works

Use cases

Frequently Asked Questions