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Risk of Ruin Calculator

Evaluate your trading system's probability of loss. Calculate risk of ruin and drawdown using Monte Carlo simulation with 1000 iterations.

System Metrics

%
0%50%100%

Average profit per winning trade

Average loss per losing trade

Win/Loss Ratio1.50

Winners larger than losers

Risk Parameters

%
0.1%2%10%
%
5%50%95%

Maximum acceptable loss from starting balance

Higher = More accurate risk assessment

Results

Risk of Ruin
0.00%
Probability to lose 30% of balance
Risk of Drawdown
0.00%
Monte Carlo simulation (1000 iterations)
Expected Value+25.00 $

Per trade expectancy

Win/Loss Ratio1.50

Good

System QualityGood

Positive expectancy

Risk LevelLow Risk

Based on risk of ruin percentage

Risk per Trade2%

Conservative

Sample Size100 trades

Good sample

Low Risk
Your trading system shows acceptable risk levels.

Example Trading Systems

Conservative System
50% WR • 1.5 W/L • 2% Risk
RoR:~4%
RoD:~7%
Moderate System
45% WR • 2.0 W/L • 3% Risk
RoR:~12%
RoD:~18%
Aggressive System
40% WR • 1.2 W/L • 5% Risk
RoR:~35%
RoD:~42%

Based on 100 trades with 50% loss level. RoR = Risk of Ruin, RoD = Risk of Drawdown

Understanding Risk of Ruin

What is Risk of Ruin?

Risk of Ruin is the probability of losing a specific percentage of your original balance. For example, a 40% loss level calculates the chance of losing 40% of your starting capital.

Risk of Drawdown

Risk of Drawdown measures peak-to-valley decline probability. Unlike Risk of Ruin, it's calculated from your highest equity point and remains constant throughout your account's lifetime.

Monte Carlo Simulation

Our calculator uses 1000 iterations of Monte Carlo simulation to create different trading scenarios using random sets of wins and losses based on your input metrics.

How to Reduce Risk?

Reduce risk by: lowering risk per trade (1-2% recommended), improving win rate, increasing win/loss ratio, or reducing position sizes during drawdown periods.

Key Metrics Formula
Expected Value = (Win Rate × Avg Win) - (Loss Rate × Avg Loss)
Win/Loss Ratio = Avg Win ÷ Avg Loss

Positive expected value is essential for long-term profitability

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