Risk of Ruin Calculator

Risk of ruin is the probability that a series of losses takes an account down to a level you cannot or will not recover from. Most traders know the idea but never put a number on it, which is a pity, because the number depends heavily on one thing they control: how much they risk on each trade.

The calculator estimates it by simulation. It plays out thousands of sequences of trades using your win rate, your reward for each unit of risk, the share of the balance you risk per trade, and the number of trades, and counts how many of those sequences fall by your chosen ruin level at some point. The same inputs always give the same answer, so you can change one number at a time and see its effect.

The result is usually striking. With the same strategy, doubling the risk per trade can multiply the chance of a deep drawdown many times over, while a modest reduction can bring it close to zero. A strategy with a real edge can still be unsafe at a size that is too large for it. That is the reason professional traders talk about sizing before they talk about entries.

It is an estimate under simple assumptions, namely that every trade is independent and has the same odds. Real markets are less tidy, so treat the result as a way to compare choices, not a forecast. Use the position size calculator to set size from the risk percentage you choose.