**About Maximum Drawdown Calculator (Formula)**

A Maximum Drawdown Calculator is a tool used to calculate the maximum drawdown, which is a common metric used in finance to assess the risk of an investment portfolio or a particular investment.

The maximum drawdown is defined as the maximum percentage decline from a peak value to a trough value. In other words, it measures the largest percentage loss an investment has experienced from its highest point to its lowest point.

**The formula for calculating the maximum drawdown is as follows:**

**Maximum Drawdown (%) = (Trough Value – Peak Value) / Peak Value * 100**

**Where:**

- Trough Value is the lowest value the investment has reached after a peak
- Peak Value is the highest value the investment has reached before the trough

The result is expressed as a percentage and represents the peak-to-trough decline relative to the peak value. For example, a maximum drawdown of 20% means that the investment’s value has declined by 20% from its highest point to its lowest point.

By calculating the maximum drawdown, investors can gain insight into the potential risk of their investments. A high maximum drawdown may indicate that an investment is more volatile and therefore riskier, while a low maximum drawdown may suggest that the investment is more stable and less risky.

Overall, a Maximum Drawdown Calculator is a useful tool for investors to assess the potential risk of their investments and make informed decisions about their portfolios.