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% loss
Losses to Ruin
27 consecutive
unhedged losing trades
Win: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 / TradeLosses to 40% RuinProbability of RuinStatus
0.5%80 trades<0.01%Safe
1%40 trades<0.01%Safe
2%20 trades0.03%Safe
3%13 trades0.45%Safe
5%8 trades3.90%Caution
10%4 trades19.75%Dangerous
COMPANION TOOL

Position Size Calculator

Lock your risk per trade to 1% on every entry and keep your Risk of Ruin at 0.00%.

Calculate Lot Sizes →
LESSON GUIDE

The 1% Position Sizing Rule

Learn how institutional trading desks structure mathematical risk control to survive all market conditions.

Read Risk Management Lesson →

Reviewed by Francis Xavier

(Senior Forex Educator & Market Analyst)
Verified Educator

The Risk of Ruin Calculator equations and algorithms have been independently verified. This calculator uses institutional-grade mathematical models and has been reviewed by senior trading educators for mathematical accuracy, formula validity, and alignment with strict risk management principles.

Read about our educational & auditing standards

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%.