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From Investopedia:  “A drawdown is the peak-to-trough decline during a specific recorded period of an investment, fund or commodity. A drawdown is usually quoted as the percentage between the peak and the subsequent trough.”

The maximum drawdown refers to the largest peak-to-trough decline of an investment or portfolio over a period of time that could contain multiple drawdowns.

As an example, a portfolio could drop from $1,000 down to $800 between June and July for a 20%/$200 drawdown.

It could rally back to $1,100 by September and then drop to $700 in October for a 36.4%/$400 drawdown.

The maximum drawdown between the June and October would have been $400.

Reference: Investopedia