Risk of Ruin Calculator

Estimate the probability of losing a set share of the account, given a win rate, a payoff ratio and the risk taken per trade.

Last reviewed 2026-08-01

Free · No sign-up · Runs in your browser

Two traders with identical strategies can have completely different outcomes purely from position size. The one risking one percent per trade survives a losing streak that ends the one risking five percent, and the strategy has nothing to do with it.

Risk of ruin estimates that difference. It combines a win rate, a payoff ratio and the risk taken per trade into the probability of losing a chosen share of the account before the edge has a chance to work. The output is uncomfortable at higher risk levels, which is the point of calculating it.

Result

Risk of ruin

Assessment: Positive edge at these inputs
Expectancy per unit risked: 0.3
Break-even win rate: 40%
Edge above break-even: 12%
Consecutive losses tolerated: 50
Units of risk to ruin: 50
Risk level for a 1% ruin probability: 5.27%

This tool is for informational and educational purposes only. It is not financial or investment advice, and past performance does not guarantee future results.

This is a simplified model. It assumes a fixed win rate, a fixed payoff ratio, constant fractional risk and independent trades - none of which hold exactly in live trading.

The single most effective lever on risk of ruin is the risk taken per trade, not the win rate.

How to use the risk of ruin calculator

Enter your win rate and payoff ratio from your own trade history.
Enter the risk you take on a single trade as a percentage.
Set what counts as ruin for you - often a fifty percent drawdown.
Compare the result against the suggested risk level for a one percent probability.

What people use this for

Choosing a per-trade risk level that the strategy can actually survive.
Showing what raising position size does to survival probability.
Checking whether a marginal edge is worth trading at all.
Understanding why a strategy that tests profitably can still end an account.

Worked examples

Every figure below is produced by running this calculator against the example inputs, so the numbers always match the tool.

A modest edge at one percent risk

52% win rate, 1.5 payoff ratio, 1% risk, ruin at a 50% drawdown.

Risk of ruin: 0%
Consecutive losses tolerated: 50
Risk level for a 1% ruin probability: 5.27%

The same edge at five percent risk

Identical strategy, five times the position size.

Risk of ruin: 0.78%
Assessment: Positive edge at these inputs
Units of risk to ruin: 10

Position size decides survival, not the edge

A positive expectancy only pays if the account is still there when the winners arrive. Because losses compound against a shrinking base, doubling the risk per trade does far more than double the probability of ruin.

That asymmetry is why professional risk limits look so conservative to newer traders. It is not caution for its own sake - it is the arithmetic of staying in the game long enough for a small edge to accumulate.

The inputs matter more than the model

Risk of ruin is exquisitely sensitive to the win rate and payoff you feed it. A win rate estimated from thirty trades, or worse from memory, produces a number with no information in it.

Use a large sample of real results, and treat the output as a comparison between risk levels rather than a precise probability. The useful question is not "what is my risk of ruin" but "how much does it change if I halve my size".

What ruin means here

The threshold is whatever you set it to. Fifty percent is common because a fifty percent loss requires a hundred percent gain to recover, which is a practical point of no return for most accounts.

For a funded or prop account the relevant threshold is the programme’s maximum drawdown, which is frequently far tighter and reached far sooner than traders expect.

Methodology and assumptions

What this calculator does, and what it deliberately does not do.

The calculation uses a standard sequential-loss model on the win rate, payoff ratio and fractional risk you enter.
It assumes each trade is independent, that risk stays a constant percentage of equity, and that the win rate and payoff are stable.
Real trading violates all three assumptions to some degree. Treat the output as a comparison between settings rather than a forecast.
Results are arithmetic on the numbers you enter. Nothing here predicts prices or connects to an exchange, broker or market data feed.
Nothing you type is transmitted or stored - the calculation runs entirely inside your browser.

This tool is for informational and educational purposes only and does not constitute financial or investment advice. Past performance does not guarantee future results.

Nothing on this website is a recommendation to buy, sell or hold any security, currency, derivative or digital asset. No price is predicted and no return is promised or implied.

Trading and investing carry the risk of substantial loss, including the loss of your entire capital. Leveraged products can produce losses that exceed your deposit. Tax treatment depends on your jurisdiction and your circumstances.

Frequently asked questions

What is an acceptable risk of ruin?

That is a personal decision this site will not make for you. Many traders target a figure well below one percent, and the tool reports the risk level that would achieve that on your inputs.

Why does my risk of ruin look so high?

Almost always because the risk per trade is large relative to the edge. Halving the position size usually reduces the figure dramatically, which is the most useful experiment to run here.

Does a positive expectancy guarantee survival?

No. Expectancy describes the average trade over a long run. Ruin is about the sequence, and a long enough losing streak ends the account regardless of what the average would have been.

Is this a prediction?

No. It is a probability model on assumptions you supply, for education only. It is not financial advice and does not predict your results.

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