Probability of hitting your drawdown limit from win rate and risk.
Risk of ruin is the chance that your account falls to a loss limit you set within a given number of trades. This calculator estimates it by playing out 4,000 random sequences of trades from your win rate, reward-to-risk ratio and risk per trade, then counting how many of them reach your limit.
Each simulated trade updates the balance by one of two rules, and a run stops once it reaches the limit:
Win: new balance = B × (1 + R × r)
Loss: new balance = B × (1 − r)
Risk of ruin = runs that fall to start × (1 − D) ÷ 4,000 × 100
Say you win 45% of trades at 1.5 to 1, risk 2% per trade, treat a 20% fall as ruin and simulate 200 trades. Your edge is positive: 0.45 × 1.5 − 0.55 × 1 = 0.125R per trade. On a 10,000 account the limit is 10,000 × 0.8 = 8,000, and one loss leaves 10,000 × 0.98 = 9,800. Twelve losses in a row would reach the limit, because 0.98¹¹ ≈ 0.801 but 0.98¹² ≈ 0.785. Mixed streaks can get there too, and the simulation puts the risk of ruin at about 16%. At 1% risk it drops to about 2%; at 3% it rises to about 31%.
Traders use it to pick a per-trade risk that suits a loss limit, such as a prop firm's maximum loss rule. Lower the risk until the figure sits where you are comfortable. Results are indicative, as real trades are not independent coin flips.
Learn more about position sizing, risk management and prop firm challenges, or see what a fall takes to recover with the drawdown calculator.
It plays out 4,000 random sequences of trades in your browser from your win rate, reward-to-risk ratio and risk per trade, then counts the share of runs whose balance falls to your ruin level within the number of trades you set.
Risk a smaller percentage per trade, as this usually has the biggest effect. A higher win rate or a better reward-to-risk ratio also helps. Try a few risk levels in the calculator to see how quickly the figure changes.
It depends on your goals, but many traders aim for a figure close to zero, often below 1%, over the number of trades they plan to take. Reducing the risk per trade is the simplest way to get there.
Each press runs a fresh set of random sequences, so the figure moves slightly, usually by a percentage point or so. Press it a few times and look at the range rather than one reading.
No. Ruin is the limit you choose, measured from your starting balance. Risk is a share of the current balance, so the balance never reaches zero and a 100% limit always shows 0%. A limit such as 20% to 50% is more useful.