# Maximum Drawdown Calculator

URL: https://speedycalculator.com/calculators/finance/maximum-drawdown/
Last updated: 2026-10-25

> The maximum drawdown calculator measures the largest peak-to-trough fall of an investment, the gain needed to recover to the peak, and how many years recovery takes at an assumed growth rate.

## Inputs

- Peak value
- Lowest value after the peak
- Expected growth rate (CAGR) during recovery (%)

## Results

- Maximum drawdown
- Loss from the peak
- Gain needed to recover
- Time to recover

## Formula

```
Maximum drawdown = (trough − peak) ÷ peak
Gain needed to recover = peak ÷ trough − 1
Recovery time = ln(peak ÷ trough) ÷ ln(1 + growth rate)
```

## Explanation

Drawdowns show the pain an investor must sit through. A 50% fall needs a 100% gain to recover. The S&P 500 fell about 57% in 2007–09 and took around four years to regain its peak.

### How to use the Maximum Drawdown Calculator

- **Peak value**
- **Lowest value after the peak**
- **Expected growth rate (CAGR) during recovery**

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter the peak value, the lowest value after the peak and the yearly growth you expect during the recovery.

### Tips

- Use the nominal annual rate and pick the compounding frequency your bank or broker states.
- Small differences in return or fees compound into large differences over decades.
- Run the calculation with a cautious, a central and an optimistic return to see the range of outcomes.
- Past returns do not guarantee future returns – nothing here is investment advice.

### Common mistakes to avoid

- Comparing an APR with an APY or effective rate.
- Ignoring inflation, taxes and fees when judging a real return.
- Entering a percentage as a decimal (5 instead of 0.05 is correct here).

### Inputs explained

FieldWhat to enterPeak valueAmount in your currencyLowest value after the peakAmount in your currencyExpected growth rate (CAGR) during recoveryIn %

### What each result means

- **Maximum drawdown** = ([Lowest value after the peak] - [Peak value])÷[Peak value]×100
- **Loss from the peak** = [Peak value] - [Lowest value after the peak]
- **Gain needed to recover** = ([Peak value]÷[Lowest value after the peak] - 1)×100
- **Time to recover** = ln([Peak value]÷[Lowest value after the peak])÷ln(1 + [Expected growth rate (CAGR) during recovery]÷100)

### Example values

How the main result changes when **Peak value** changes and everything else stays at the example values above:

Peak valueMaximum drawdown (%)50,0002475,000-17.33100,000-38125,000-50.4150,000-58.67200,000-69

## Worked example

Inputs — Peak value: $100,000; Lowest value after the peak: $62,000; Expected growth rate (CAGR) during recovery: 8 %.

Results — **Maximum drawdown = -38 %**; Loss from the peak = $38,000.00; Gain needed to recover = 61.29 %; Time to recover = 6.2 years.

## FAQ

**What is maximum drawdown?**
The largest fall from a peak to a subsequent low.

**Why does a 50% loss need a 100% gain?**
Because the gain is measured from the lower value.

**Is drawdown the same as volatility?**
No – volatility measures all swings; drawdown measures the worst loss.

**What formula does the Maximum Drawdown Calculator use?**
Maximum drawdown = (trough − peak) ÷ peak.