ATLASDrawdown
Investing glossary · Risk and statistics
The percentage decline of a price or portfolio from its highest previous value to a later low.
Definition
A drawdown is how far an investment has fallen from its previous peak. The maximum drawdown is the biggest peak-to-trough fall over a period, and it is the number that best describes how painful holding the investment would have been.
Drawdowns are asymmetric: a 50% fall needs a 100% gain to get back to the starting point, because you are climbing from a smaller base. This is why avoiding large losses matters more than it seems, and why the same average return can feel completely different depending on the path.
Formula
Drawdown = price ÷ previous peak − 1
The peak is the highest value reached before the point you measure; the recovery gain needed is 1 ÷ (1 − drawdown) − 1.
Worked example
Looking at the weekly closes of the last year, Tesla (TSLA) had a maximum drawdown of 35%, falling from its peak on Dec 19, 2025 to its low on Jul 31, 2026. Today it stands 19% below its highest weekly close of the year. To get back to a previous peak after a fall of 35%, it would need a gain of 55%.
The needed gain is always bigger than the loss, and the gap widens quickly for deep drawdowns.
How ATLAS uses it
Drawdown is part of the ATLAS risk screen, and the Recovery product turns it into a probability: the chance of getting back to a previous level in a given time.
Related in ATLAS: Recovery →Browse all ATLAS tools →See it on a real stock
The example above uses these companies. Open their pages for the full numbers:
Frequently asked questions
What is a maximum drawdown?
The largest peak-to-trough decline over a chosen period. It is a measure of the worst experience of an investor who bought at the top.
Why does recovering from a loss take a larger gain?
Because the gain applies to a smaller base. After losing 20% you need 25% to get back; after losing 50% you need 100%.
Related terms
Put the idea to work on your own stocks
Open any company in ATLAS to see its fair value, its odds of rising and its risk numbers side by side.
Try ATLAS →Not investment advice. ATLAS estimates are produced by statistical models from public data; they can be wrong and past performance does not predict future results. Consider your own situation before investing. Disclaimer