Maximum drawdown is an important indicator for assessing the risk of an investment. It measures the largest loss an investment or portfolio has suffered from its peak to trough during a given period. Maximum drawdown gives investors an insight into the potential risk of loss and the volatility of an investment. It is usually expressed as a percentage or absolute value and is used to quantify the fluctuations and potential losses of an investment. A lower maximum drawdown indicates a lower risk of loss, while a higher maximum drawdown indicates higher volatility and potentially higher losses.