Risk of ruin calculator
The chance that a run of trades takes your account down to the level you would call ruin.
- Expectancy per trade
- +0.375R
- Breakeven win rate
- 40.0%
- Losing streak to plan for
- 9 losses
- Typical balance change
- +319.2%
- 1%<0.1%
- 2%<0.1%
- 3%<0.1%
- 5%0.2%
- 10%5.1%
How the risk of ruin is estimated
The calculator plays out thousands of random sequences of trades. Each trade wins with your win rate, wins your reward to risk times the risk, and loses the risk otherwise, always as a percentage of the balance at that moment.
The result is the share of sequences that touch your ruin level at any point. The streak figure is the longest losing run that 95% of sequences stay within.
Expectancy (R) = win rate × average win − (1 − win rate)Breakeven win rate = 1 ÷ (1 + reward : risk)
Questions
What is a good risk of ruin?
As close to zero as you can get. Many traders accept nothing above 1%. Above 10%, a normal bad month can end the account.
Can a profitable strategy still blow up?
Yes. A positive expectancy only says you win on average. With too much risk per trade, a losing streak that is perfectly normal for the strategy can still reach the ruin level first.
Why a simulation and not a formula?
The classic formula is exact only when wins and losses are the same size and the stake is fixed. Real traders risk a percentage of a changing balance with a reward to risk other than 1, and a simulation handles both.
How do I lower my risk of ruin?
Cut the risk per trade first. It has the biggest effect, as the half risk line under the result shows. A higher reward to risk or win rate helps too, but those are harder to change.
Trade the same, pay less
Every lot you trade pays spread or commission. Open your account through AutoFXRebate and the broker pays part of that cost back to you as a rebate.
Trading forex and CFDs on margin carries a high risk of losing money. These tools give estimates for planning and education, not investment advice.