Risk of ruin calculator
How often does a strategy with your win rate and win/loss ratio lose most of the account at the size you risk per trade? Enter your numbers: 2,000 random sequences of trades show the share that is ruined and how deep the drawdowns go.
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How it works
Risk of ruin = the share of simulated trade sequences in which the account falls to the ruin line. Each sequence draws wins and losses at random from your win rate, so the result is a distribution, not a forecast.
Example: a 45% win rate, wins 1.5 times the losses, 5% risk per trade and 200 trades, with ruin at half the account: about 15.5% of 2,000 sequences are ruined. At 2% risk per trade, about 0.2%.
How the simulation works
Each sequence starts with the same account and takes the trades one by one. A trade wins with your win rate and adds the risk times the win/loss ratio; otherwise it loses the risk. The risk is a fixed share of the account at that moment, so it shrinks after losses and grows after wins.
A sequence that falls to the ruin line stops there. The calculator repeats this 2,000 times and shows how the results are spread out. The same inputs always give the same sequences, so a shared link shows the same figures.
Why the size matters as much as the edge
A 45% win rate with wins 1.5 times the losses makes money on average. At 5% risk per trade a noticeable share of sequences still loses half the account within 200 trades; at 2% that is rare. Long losing streaks are normal over a few hundred trades.
What it does not tell you
The simulation assumes every trade is independent and that your win rate and ratio are right. Real results come in clusters, and backtest figures are usually better than live ones. Use numbers from out-of-sample tests, and read the result as a range of what could happen, not a forecast.
Questions
What is risk of ruin?
The chance that an account falls so far that it can no longer trade as planned. Here it is the share of simulated sequences that reach the ruin line you set, for example losing half of the starting account.
Why a random simulation instead of a formula?
The textbook formulas assume a fixed bet and wins the same size as losses. With risk as a share of the account and any win/loss ratio, simulating many sequences is simpler, and it shows the drawdowns and losing streaks as well.
How many simulations does it run?
2,000 sequences for each set of inputs. Running it again with the same numbers gives the same result.
Does a low risk of ruin mean a strategy is safe?
No. It only says that, if your win rate and ratio hold, the account rarely reaches the ruin line. If the real numbers are worse, so is the risk.
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For education. Not investment advice. Check the exchange before you trade.