Underwater chart
What it shows
An "underwater" chart: for each day it shows how many percent the portfolio was below its prior peak. The line touches zero at new highs and dips deeper during drawdowns. It measures two things: how deep and how long the portfolio stayed below water.
How to read it
Relate the depth to your tolerance against portfolio value: −60% means that at the worst point value fell by more than half from its peak. Time matters too (a long time underwater can be harder than a short, deep dip). The line returning to 0 = matching the previous maximum, i.e. the end of that drawdown. A description of the past, not a prediction.
Parameters
- Drawdown %
- (value − prior peak) ÷ peak; always ≤ 0. The deepest point = the maximum drawdown.
- Positive reading: Shallow dips and a quick return to 0, which means the portfolio recovered losses efficiently.
- Negative reading: Deep drops (e.g. −50%) and long stretches below water.
- Neutral reading: Moderate, short-lived drawdowns.
- Time underwater
- How long (days) the line stays below 0 = how long the portfolio needed to reclaim its previous peak.