Asset Drawdown Chart

An asset drawdown is the percentage decline from a prior peak price to a subsequent trough over a selected time period. It measures downside risk by showing how far an asset fell before reaching a new high.

Drawdown is calculated by comparing the current price to the highest price reached so far (the running peak). Formula: Drawdown (%) = (Current Price / Running Peak − 1) × 100. If an asset falls from 110 to 80, the drawdown is (80/110 − 1) × 100 = −27.3%.

A drawdown chart plots the percentage decline from each historical peak over time. A value of 0% means the asset is at a new high. Negative values show how far the asset is below its most recent peak.

Maximum drawdown (MDD) is the largest peak-to-trough decline observed within a selected period before the asset reaches a new high. It represents the worst historical loss from a high-water mark during that timeframe.

Current drawdown shows how far the asset is below its latest running peak right now. Maximum drawdown shows the worst peak-to-trough decline that occurred anywhere in the selected historical window.

A −20% drawdown means the asset fell 20% from its most recent peak. Large market indexes often define a bear market as a drop of 20% or more. Drawdowns are asymmetric: a −50% loss requires a +100% gain to recover back to the previous peak.

No. Drawdown is measured from the asset’s historical peak, not from your entry price. You could experience a large drawdown from the peak while still being profitable if you bought at a lower price.

Volatility measures how much returns fluctuate up and down over time. Drawdown focuses specifically on declines from previous highs. Two assets may have similar volatility but very different drawdown depths and recovery times.

Drawdown duration measures how long an asset stays below its prior peak. Time to recovery (or time back to high-water mark) is the length of time required for the asset to regain its previous peak after a decline.

Comparing an asset’s drawdowns to the S&P 500 helps evaluate how it performs during market stress. If it falls deeper or takes longer to recover than the benchmark, it may carry higher downside risk.

It depends on the data series used. Price-return data reflects only price changes, while total-return data includes reinvested dividends. Most datasets are split-adjusted, but dividend treatment varies. Total-return data gives a more complete picture of long-term drawdowns.

Drawdowns are backward-looking and depend on the chosen timeframe and data source. Maximum drawdown shows the worst historical drop but does not predict future risk, frequency of declines, or recovery speed. It should be used alongside other risk metrics.