Risk of Ruin Calculator
"Risk of ruin" is the probability that a string of losing trades drains your account below a level you could not recover from, given how you size and how often you win. This calculator estimates it with a Monte-Carlo simulation: it plays out thousands of randomised trade sequences using your win rate, reward-to-risk ratio and risk per trade, then reports the share of those sequences that hit ruin.
The figure is a model of your inputs, not a forecast of your real results. It assumes each trade is independent and that your edge stays constant - real markets do neither. Use it to compare how sizing and win-rate assumptions change your exposure, not as a promise about live trading.
How to use it
- Win rate - the percentage of trades you expect to win.
- Reward-to-risk - how many multiples of your risk a winner returns. R:R of 2 means a winner gains twice what a loser costs.
- Risk per trade - the share of current equity risked on each trade (fixed-fractional sizing).
- Ruin threshold - how much drawdown counts as "ruin". 50% means losing half the starting balance.
- Trades per sequence - how many trades each simulated run plays out.
The tool runs many independent sequences and reports the proportion that breach the ruin threshold, plus the median ending equity. Re-run to see the estimate vary slightly - that variation is normal for a simulation.
FAQ
What is risk of ruin?
It is the modelled probability that a sequence of trades reduces your account past a defined ruin level before it recovers.
Why use Monte-Carlo instead of a formula?
Closed-form risk-of-ruin formulas assume fixed bet sizes and simple win/loss payoffs. A simulation handles fixed-fractional sizing and compounding more realistically and is easy to reason about.
Does a low result mean I'm safe?
No. The model assumes your win rate and R:R are accurate and stable and that trades are independent. If your real edge is lower or your results are correlated, true risk is higher. Treat the output as a what-if, not a guarantee.
Why does the answer change each time?
It is a randomised simulation. Small run-to-run variation is expected; increase trades per sequence or re-run for a more stable feel.
Is my data stored?
No. The simulation runs entirely in your browser.
See also the free trading tools hub and please read our risk disclosure.
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