Maximum Drawdown

Maximum Drawdown

Maximum drawdown or MDD measures how much in percentage terms an investor would have lost from the peak level of a fund to the trough i.e. measuring the largest single decline between the peak and the trough in a set time period, assuming the investor had bought at the peak level and sold at the trough. The MDD can vary from zero if the investment experienced no setbacks over the period in question to 100% if the investment completely loses value.

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