Risk of Ruin Calculator
Free risk of ruin calculator: simulate thousands of paths for the probability your account hits a fatal drawdown — and why risk per trade is the biggest lever.
Risk of ruin is the probability your account hits a drawdown it can't recover from before your edge plays out. Even a positive edge can ruin you if you bet too big — see your number.
QuantDojo · Free tool
Risk of Ruin Calculator
The probability your account hits a fatal drawdown before your edge plays out. The one number that should set your risk per trade.
How it works: a Monte Carlo runs thousands of paths at your risk per trade; ruin = losing your ruin level of the account at any point within the horizon. Even a positive edge can ruin you if you bet too big.
Educational tool — not financial advice. Assumes independent trades with fixed win/loss sizes; real risk of ruin is higher when losses cluster.
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How to use the risk of ruin calculator
Enter your win rate, payoff (reward-to-risk), risk per trade, the ruin level (the drawdown you would consider fatal — often 50%), and a horizon in trades. Hit Run. The calculator simulates thousands of paths and reports the probability you hit that ruin level before the edge plays out.
The lesson most traders learn too late: even a positive edge can ruin you if you bet too big. Risk per trade is the single biggest lever on this number — far more than win rate.
Frequently asked questions
What is risk of ruin in trading?
The probability that a string of losses drops your account to a level you cannot recover from (or will not tolerate) before your edge produces its expected return. It depends on win rate, payoff, and — most of all — how much you risk per trade.
How do I reduce my risk of ruin?
Risk less per trade. Halving your risk per trade cuts risk of ruin dramatically. Improving win rate or payoff helps too, but position size is the lever you fully control.
Is a positive expectancy enough to be safe?
No. Positive expectancy means you win over the long run if you survive. Oversized bets can ruin you long before the long run arrives.
Risk of ruin assumes your edge is real. If it is not, no bet size is safe. Check your edge with quantcheck.