Risk Of Ruin Calculator
Your Strategy
Your Odds
Your Odds At Different Risk Levels
| Risk Per Trade | Risk Of Ruin | Chance Of Profit | Median Change |
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How Risk Of Ruin Works
Edge Is Not Enough
A profitable strategy can still lose everything if the position size is too large. Ruin happens when a normal run of losses arrives before your edge has had enough trades to show up. The edge decides where you end up, the size decides whether you survive to get there.
Why Risk Compounds Against You
Doubling your risk per trade does far more than double your risk of ruin. Halving your risk usually cuts the odds of ruin dramatically while only slowing your returns. That trade is almost always worth making, which is why the table above is the most useful part of this page.
What The Simulation Does
It runs your strategy ten thousand times, dealing random wins and losses at your win rate and sizing each trade as a percentage of the balance at the time. It counts how often the drawdown limit is breached before the run finishes. Same inputs always give the same answer.
Risk Of Ruin Questions Answered
What is risk of ruin in trading?
Risk of ruin is the probability that your account falls to a level you have defined as failure before a given number of trades is complete. On a funded account that level is usually your maximum drawdown limit. It depends on three things working together: your win rate, your reward to risk, and how much you risk per trade.
What is an acceptable risk of ruin?
Most professionals aim to keep it under 1 percent, and many would treat anything above 5 percent as unacceptable. The reason is that ruin is permanent while a slower return is only temporary. If your figure is above 10 percent, reducing your risk per trade will improve your odds far more than trying to improve your win rate.
Can I reduce my risk of ruin without a better strategy?
Yes, and it is usually the fastest fix available. Cutting your risk per trade in half typically reduces the risk of ruin by much more than half, because losing streaks then need to be far longer to reach your limit. Your expected return per trade does not change at all, only the path there becomes smoother.
What if my expectancy is negative?
Then no position size will save the account, it only changes how long the decline takes. A negative expectancy means each trade loses money on average, so smaller sizing slows the bleed rather than stopping it. The only fix is a better win rate, a better reward to risk, or not trading that strategy.
How is expectancy calculated?
Multiply your win rate by your reward to risk, then subtract your loss rate. A 50 percent win rate at 1.5 to 1 gives 0.5 times 1.5 minus 0.5, which is 0.25R per trade. That means you make a quarter of what you risk on an average trade. Anything above zero is a positive edge.
Why do the same inputs always give the same result?
The simulation uses a fixed starting seed, so the ten thousand runs are identical every time for the same inputs. That makes results reproducible and lets you compare two risk levels fairly, rather than seeing numbers shift each time you look.
How accurate is this calculator?
The simulation is mathematically sound but it assumes each trade is independent and that your win rate and reward to risk stay constant. Real trading is messier, with losses clustering during bad market conditions and results drifting as conditions change, so treat the figure as a guide to whether your sizing is sensible rather than a precise forecast.
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