Financial metrics2 min read
DrawdownGerman: Drawdown
A drawdown is an investment’s percentage decline from a previous peak to a subsequent lower value.
In plain language
Maximum drawdown is the largest such decline within a selected period. It helps put historical losses into perspective. A past maximum does not limit future possible losses.
Let’s make it concrete
A portfolio falls from €10,000 to €7,500, a 25% drawdown. Recovering to €10,000 then requires a rise of about 33.3%.
Simplified example for illustration.Worth understanding
Percentage gains and losses are not symmetrical. A large loss requires a proportionally larger gain to recover.
Read more from official sources
For further learning and reference:
Financial education for orientation. No individual investment, tax or legal advice.
← Back to the glossary