STATISTICAL LONGEVITY CALCULATOR
Risk of Ruin Calculator
Determine the exact mathematical probability that your trading strategy will suffer a severe account drawdown or total loss based on your win rate, risk per trade, and payoff ratio.
Quick Presets:
Strategy Statistics
50%
1.5%
✓ Positive Expectancy (+0.25R per trade)
Your system possesses a genuine mathematical edge. With proper risk sizing, profitability is statistically assured over a large sample.
Probability of Account Ruin
Chance of hitting a 40% drawdown at 1.5% risk per trade
✓ Institutional Safe (<1% Ruin)
< 0.01%
Mathematical probability of reaching 40% lossLosses to Ruin
27 consecutive
unhedged losing tradesWin:Loss Ratio
50% : 50%
Payoff (R:R)
1.5:1
Per Trade Edge
+25.0%
Risk Per Trade Sensitivity Matrix (50% Win · 1.5:1 R:R)
| Risk / Trade | Losses to 40% Ruin | Probability of Ruin | Status |
|---|---|---|---|
| 0.5% | 80 trades | <0.01% | Safe |
| 1% | 40 trades | <0.01% | Safe |
| 2% | 20 trades | 0.03% | Safe |
| 3% | 13 trades | 0.45% | Safe |
| 5% | 8 trades | 3.90% | Caution |
| 10% | 4 trades | 19.75% | Dangerous |
COMPANION TOOL
Calculate Lot Sizes →Position Size Calculator
Lock your risk per trade to 1% on every entry and keep your Risk of Ruin at 0.00%.
LESSON GUIDE
Read Risk Management Lesson →The 1% Position Sizing Rule
Learn how institutional trading desks structure mathematical risk control to survive all market conditions.
Frequently Asked Questions
Risk of Ruin is a statistical probability that a trader's account balance will decrease to a point where continued trading is impossible (e.g. 100% loss) or where account drawdown exceeds an acceptable threshold (e.g. 30% or 50%). It is based on the classical gambler's ruin problem formulated by mathematicians Perry Kaufman and Nauzer Balsara.
If your reward-to-risk ratio is poor (e.g. risking $100 to make $20) or if your risk per trade is too high (e.g. 10% per trade), a normal statistical clustering of 5-8 consecutive losses will wipe out your account before the law of large numbers allows your win rate to materialize.
Expectancy = (Win Rate × Average Win) - (Loss Rate × Average Loss). If your expectancy is zero or negative, your Risk of Ruin is mathematically 100.00% regardless of your account balance. If expectancy is positive, keeping risk per trade under 1-2% reduces the Risk of Ruin to near 0.00%.
Professional prop traders and CTA hedge funds keep risk per trade strictly between 0.5% and 1.5% of total equity. At 1% risk per trade with a positive expectancy system, the mathematical probability of suffering a 30% drawdown is less than 0.5%.