Drawdown
How far price is below its highest close so far, as a percent.
Statistics and riskBest on 1Y, 3Y, MAXAlso called fall from peak
What it shows
Drawdown = (close − highest close so far) ÷ highest close so far. It is zero at a new high and negative when price is below its peak.
It shows how deep each decline has been, and how long price stayed below its previous peak.
How we find it
The same code that draws it on your chart follows these steps, with the same result every time.
- Track the running highest close.
- Drawdown = (close ÷ running high − 1) × 100.
- Plot as an area under zero.
- Mark the deepest point.
Starting values: Basis closing prices. These are proposed and will be tuned on real price data before launch.
How to read it
- The panel shows percent below the peak.
- Zero is a new high.
- The gold dot is the deepest point.
Status labels you may see
| Label | What it means |
|---|---|
| At a high | Drawdown is 0. |
| Moderate | Between 0 and −20%. |
| Deep | Below −20%. |
What cancels it
Resets to zero at each new high.
What traders check next
- Depth and length of past drawdowns.
- Time to recover.
- Compare with the index.
Limits
- Depends on the start date.
- One number cannot show the path.
- Past drawdowns do not limit future ones.
Try it in forecastviz
- Open any ticker and choose Statistics and risk → Drawdown in the left menu.
- Switch between 1Y, 3Y, MAX to see how the picture changes.
- Compare with Maximum drawdown and Recovery from drawdown on the same chart.
Questions
What is a normal drawdown?
It varies a lot by stock. We show each stock's own history.
Is a drawdown a loss?
Only if you sold at the low.
Related trends
Further reading
- Kaufman, Trading Systems and Methods
- Achelis, Technical Analysis from A to Z
- Mandelbrot, The (Mis)Behavior of Markets
- Sharpe, Mutual Fund Performance
Educational only. Not financial advice, and not a price forecast. Charts are drawn by code from past price data, which may be delayed.