Risk of Ruin Calculator
What is the probability of blowing up your trading account? Input your win rate, risk/reward ratio, and risk per trade to find out.
Your Trading Statistics
Percentage of trades that are profitable
Average winning trade ÷ Average losing trade
Percentage of account risked on each trade
Strategy Summary
Total Risk of Ruin (100% Drawdown)
Your strategy has excellent survival odds. Keep your discipline.
Probability by Drawdown Level
Quick Scenario Comparison
| Scenario | Win % | R:R | Risk/Trade | Ruin % |
|---|---|---|---|---|
| Conservative Pro | 50% | 2:1 | 1% | 100.00% |
| Aggressive Scalper | 65% | 1:1 | 3% | < 0.01% |
| Swing Trader | 45% | 2.5:1 | 2% | 100.00% |
| Gambler (No Edge) | 50% | 1:1 | 5% | 100.00% |
| ⟶ Your Strategy | 55% | 1.5:1 | 2% | < 0.01% |
Understanding Risk of Ruin
What is Risk of Ruin?
Risk of Ruin (RoR) is a statistical measurement of the probability that a trader will lose a specified percentage of their account before achieving their profit target. It answers the critical question: "Given my trading strategy's win rate, reward-to-risk ratio, and position sizing — what are the chances I go broke?"
The Formula
The mathematical formula uses the concept of a random walk with absorbing barriers. For a simplified model: RoR = ((1 - Edge) / (1 + Edge))^(Capital Units), where Edge = (Win% × Avg Win) - (Loss% × Avg Loss), and Capital Units = Account Size / Risk Per Trade.
Key Insights
- ▸A 1% risk per trade with a 50% win rate and 2:1 R:R gives a near-zero risk of ruin
- ▸Increasing risk per trade from 2% to 5% can exponentially increase your ruin probability
- ▸Win rate matters less than the risk/reward ratio for long-term survival
- ▸Professional traders typically aim for a risk of ruin below 1%
- ▸Even a profitable strategy can blow up with improper position sizing