## Maximum Drawdown Solution

STEP 0: Pre-Calculation Summary
Formula Used
Maximum Drawdown = ((Trough Value-Peak Value)/Peak Value)*100
MDD = ((Vtrough-Vpeak)/Vpeak)*100
This formula uses 3 Variables
Variables Used
Maximum Drawdown - Maximum Drawdown is the maximum observed loss from a peak to a trough of a portfolio, before a new peak is attained. Maximum drawdown is an indicator of downside risk over a specified time period.
Trough Value - Trough Value is the lowest value attained a portfolio in a specified period due to price action.
Peak Value - Peak Value is the highest value attained by portfolio in a specified period due to price action.
STEP 1: Convert Input(s) to Base Unit
Trough Value: 25000 --> No Conversion Required
Peak Value: 50000 --> No Conversion Required
STEP 2: Evaluate Formula
Substituting Input Values in Formula
MDD = ((Vtrough-Vpeak)/Vpeak)*100 --> ((25000-50000)/50000)*100
Evaluating ... ...
MDD = -50
STEP 3: Convert Result to Output's Unit
-50 --> No Conversion Required
-50 <-- Maximum Drawdown
(Calculation completed in 00.004 seconds)
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## Credits

Created by Keerthika Bathula
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Verified by Vishnu K
BMS College of Engineering (BMSCE), Bangalore
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## <Risk Management Calculators

Sortino Ratio
​ Go Sortino Ratio = (Expected Portfolio Return-Risk Free Rate)/Standard Deviation of Downside
Maximum Drawdown
​ Go Maximum Drawdown = ((Trough Value-Peak Value)/Peak Value)*100
Modigliani-Modigliani Measure
​ Go Modigliani-Modigliani measure = Return on Adjusted Portfolio-Return on Market Portfolio
Upside/Downside Ratio
​ Go Upside/Downside Ratio = Advancing Issues/Declining Issues

## Maximum Drawdown Formula

Maximum Drawdown = ((Trough Value-Peak Value)/Peak Value)*100
MDD = ((Vtrough-Vpeak)/Vpeak)*100

## What is Maximum Drawdown?

Maximum drawdown is a specific measure of drawdown that looks for the greatest movement from a high point to a low point, before a new peak is achieved. However, it's important to note that it only measures the size of the largest loss, without taking into consideration the frequency of large losses. Because it measures only the largest drawdown, MDD does not indicate how long it took an investor to recover from the loss, or if the investment even recovered at all.

## How to Calculate Maximum Drawdown?

Maximum Drawdown calculator uses Maximum Drawdown = ((Trough Value-Peak Value)/Peak Value)*100 to calculate the Maximum Drawdown, The Maximum Drawdown is the maximum observed loss from a peak to a trough of a portfolio, before a new peak is attained. Maximum drawdown is an indicator of downside risk over a specified time period. Maximum Drawdown is denoted by MDD symbol.

How to calculate Maximum Drawdown using this online calculator? To use this online calculator for Maximum Drawdown, enter Trough Value (Vtrough) & Peak Value (Vpeak) and hit the calculate button. Here is how the Maximum Drawdown calculation can be explained with given input values -> -50 = ((25000-50000)/50000)*100.

### FAQ

What is Maximum Drawdown?
The Maximum Drawdown is the maximum observed loss from a peak to a trough of a portfolio, before a new peak is attained. Maximum drawdown is an indicator of downside risk over a specified time period and is represented as MDD = ((Vtrough-Vpeak)/Vpeak)*100 or Maximum Drawdown = ((Trough Value-Peak Value)/Peak Value)*100. Trough Value is the lowest value attained a portfolio in a specified period due to price action & Peak Value is the highest value attained by portfolio in a specified period due to price action.
How to calculate Maximum Drawdown?
The Maximum Drawdown is the maximum observed loss from a peak to a trough of a portfolio, before a new peak is attained. Maximum drawdown is an indicator of downside risk over a specified time period is calculated using Maximum Drawdown = ((Trough Value-Peak Value)/Peak Value)*100. To calculate Maximum Drawdown, you need Trough Value (Vtrough) & Peak Value (Vpeak). With our tool, you need to enter the respective value for Trough Value & Peak Value and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.
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