Risk of Ruin Calculator
Calculate the probability of losing your trading capital based on win rate.
Your Trading Stats
Replaces Reward : Risk with the underlying R-multiples. Use these if you actually track average winner and loser sizes from your trade log.
Understanding Risk of Ruin
- < 1% risk of ruin is the bar for serious traders — the result label turns "Excellent".
- Halving your risk per trade is usually the fastest way to drop ruin probability.
- A higher Reward:Risk ratio compensates for a lower win rate; trend followers thrive on this.
- Even with a positive edge, variance can blow accounts that risk too much per trade.
What is a Risk of Ruin Calculator?
A risk of ruin calculator estimates the probability of losing a catastrophic portion of your trading capital before reaching your profit goals. Even profitable strategies can blow up with improper position sizing.
This tool helps you understand why smaller position sizes dramatically reduce your chances of account destruction, even with modest win rates.
Key Features
- Probability calculations
- Win rate input
- Risk per trade analysis
- Reward-to-risk ratio
- Survival probability chart
- Position size recommendations
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Frequently Asked Questions
Risk of ruin is the probability that you will lose a catastrophic portion of your trading capital (often defined as 50% or more) before achieving your profit goals. Even profitable strategies can blow up if position sizes are too large.
Professional traders target <1% risk of ruin. Anything above 5% is concerning, and above 15% is dangerous. Remember: if you blow up once, you're done—even if probability was "only" 10%.
Reduce your risk per trade. Going from 2% risk to 1% risk can drop your risk of ruin dramatically. You can also improve win rate or reward-to-risk ratio, but position sizing has the biggest impact.
Absolutely. This is called gambler's ruin. Even with 55% win rate and 1:1 R:R, if you risk 50% per trade, you'll eventually hit a losing streak that wipes you out before your edge manifests.