Risk of Ruin Calculator
Combines your win rate, reward-to-risk ratio, and bet size to run a deep statistical analysis on the likelihood of total terminal capital loss.
Risk of Ruin Calculator
Calculate the mathematical probability of losing your entire bankroll based on your win rate and bet sizing.
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Note: Calculation assumes even money payout for simplified ruin probability.
Probability of Total Ruin
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The chance you will hit zero before doubling your bankroll.
Trading Units—
Risk % of Bankroll—
Theoretical Edge—
Risk Reduction Scenarios
| Bet Size | Units (Bankroll/Bet) | Risk of Ruin |
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How to Use Risk of Ruin Calculator in 3 Easy Steps
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Step 1
Load your historical trading bot metrics: your win rate percentage, average winning trade dollar value, and average losing trade dollar value.
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Step 2
Select your baseline capital risk percentage (typically 1% to 3%).
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Step 3
Determine your ultimate ruin threshold and simulate the mathematical burnout probability across 1,000 trades.
Frequently Asked Questions
A negative expectancy is an absolute mathematical failure inherently proving that your trading system is actively, inevitably destroying capital over time. This occurs mechanically when your win rate is too weak to properly compensate for a low reward-to-risk ratio. The Risk of Ruin for a negative expectancy algorithm is unconditionally 100%.
Absolutely. Institutional trend-following funds famously operate efficiently utilizing win rates strictly ranging from 30% to 40%. They rely entirely on a massive, asymmetric Reward-to-Risk structure. Their average winning trade generates 4x or 5x the capital physically destroyed by their meticulously defined average loss, rendering the low win rate irrelevant.
Risking 5% aggressively exposes your entire portfolio to catastrophic "Sequence Risk." Given a long enough timeline, hitting ten consecutive losses is an absolute mathematical certainty. If you risk 5% continuously, a standard localized drawdown immediately burns 50% of your account, requiring an aggressively impossible 100% gain specifically to return to mere breakeven.
No calculator can prevent poor human psychology. A mathematical model structurally assumes you possess the robotic discipline to execute 1,000 trades exactly according to the mechanical plan without revenge trading, overriding stop losses, or deviating from your exact position sizing strategy halfway through a brutal drawdown block.
Institutional asset managers, highly profitable hedge funds, and conservative traders rigorously demand a statistical Risk of Ruin firmly pegged below 1.0% or 2.0%. Anything violently exceeding a 5% structural probability implies the trader is aggressively over-leveraged and actively flirting with catastrophic financial suicide.