# Max drawdown

In this article, you'll learn about the max (maximum) drawdown and how it's calculated in Composer.

**What is the max drawdown?**

The max drawdown of an investment is the greatest percent loss in the investment's value, from its peak to its trough, over a given time period. It is a measure of an investment's downside risk.

**What is the formula?**

**What is the step-by-step calculation?**

Let's go through the calculation of the max drawdown step-by-step for a symphony backtest.

We'll look at each value in the backtest period, and keep track of two quantities: the maximum value we've seen and the maximum drawdown we've seen, up to that point.

- Start with both the maximum value and the maximum drawdown value set to 0, and consider each day's value in chronological order.
- If a value is greater than the maximum value we've seen so far, record it as such.
- If not, compute the magnitude of the percentage loss between the maximum value we've seen so far, and the value we are observing; this is the drawdown.
- If this drawdown is greater than the maximum drawdown we've seen so far, record it as such.
- Repeat the above steps until we've observed every value.
- The maximum drawdown we've recorded when we've finished observing all the values is the maximum drawdown over the period.