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Maximum Drawdown Estimator

Returns compound into a curve starting at 1.0 before anything is measured.

Oldest first. Commas, spaces or new lines separate.

yrs

Only the Calmar ratio uses this. At zero it is withheld, because a series of points carries no calendar.

Maximum drawdown
25.00%Peak at point 3, trough at point 4, measured against the peak
Peak level
120.0000
Trough level
90.0000
Fall took
1 period
Recovery took
2 periods
Underwater
3 periods
Annualized return
—
Calmar ratio
—

The peak was regained at point 6. Calmar is the annualized return divided by the maximum drawdown; it needs a calendar span, which a series of points does not carry.

Level · % below peak
  • Level, left axis
  • Drawdown from the running peak, right axis
  • Peak of the largest decline

Hypothetical illustration, computed only from the series entered. The figure depends on the sampling interval: a daily series finds deeper troughs than a monthly one over the same window, because a monthly series never sees the days in between.

Recovery is withheld while the curve is still below its peak at the end of the series, rather than assumed to arrive at the last observation. Calmar needs a calendar span and is withheld without one, and it has no value at a drawdown of zero.

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What this does

Maximum drawdown is the worst fall from a high point to a later low point, measured against that high. It answers a different question from a return figure: not what the account made, but how far it sank along the way. Recovery time sits beside it, because a 25% fall that came back in two months and one that took four years are not the same experience.

Worked example

A balance running 100, 110, 105, up to 120, down to 90, 95, then 130 has a maximum drawdown of 25.00%: the fall from the 120 peak at point 3 to the 90 trough at point 4, divided by 120. It regained 120 at point 6, so recovery took two periods.

Mistake it prevents

Measuring the fall against the starting value rather than the peak. Against the 100 start the same fall reads as 10%, which understates it by more than half.