Risk of ruin calculator

Risk of ruin is the chance that a run of losses takes your account down by a level you could not recover from. This calculator simulates 2,000 accounts taking 500 trades each with your win rate, payoff and risk per trade, and counts how many fall below your ruin level. Higher risk per trade raises it sharply.

Chance of ruin: 0.35%

How it is calculated

Each simulated trade wins with your win rate: equity × (1 + risk × payoff)
Each loss: equity × (1 − risk)
Ruin = equity falls to (100% − ruin level) of the start
Chance of ruin = ruined runs ÷ 2,000 runs (500 trades each, fixed seed)

Worked example

At a 45% win rate, a 1.5 payoff and 2% risk per trade, the share of runs that halve the account is small. Raise risk to 10% per trade with the same edge and it climbs steeply. The edge did not change; only the size did.

Educational maths only. Not investment advice.

Questions

Why a simulation instead of a formula?

Closed-form formulas assume fixed bet sizes or equal wins and losses. Simulating percentage risk is closer to how traders size positions.

Will the result change each time?

No. The simulation uses a fixed seed, so the same inputs always give the same answer.

Track these numbers automatically

DisciplineTrade records risk, R-multiples and charges for every trade, and scores your discipline. Free.

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Risk of ruin calculator