Trading Tools
Risk-of-Ruin Estimator
Estimate how your win rate, reward-to-risk ratio and risk per trade could affect the long-term survival of your trading account.
What does "ruin" mean?
For this calculator, ruin means reaching a user-defined maximum account drawdown — it does not necessarily mean losing the entire account. The result is a mathematical estimate based on constant trade performance and does not predict future results.
Assumptions
The percentage of trades you expect to close profitably.
e.g. 1.5 means an average winner is 1.5× the average loser.
£100 per trade initially
Ruin balance: £5,000
Sets the time horizon for the estimate.
Results update automatically as you change values (10,000 simulated paths per run).
Estimated Risk of Ruin
Enter valid assumptions to see the estimated risk of ruin.
Understanding risk of ruin
Risk of ruin estimates the probability that a trading account reaches a specified loss threshold before completing a given number of trades.
Even a profitable strategy can experience long losing streaks. The amount risked per trade often has a greater effect on account survival than traders expect.
A strategy with positive expectancy can still carry a high risk of severe drawdown when position sizes are too large.
The estimate assumes that win rate, reward-to-risk ratio and execution remain consistent. Real trading results may be affected by spread, commission, slippage, changing market conditions and trader behaviour.
Important limitations
- The result is an estimate, not a forecast.
- Historical win rate may not continue.
- Wins and losses are treated as independent events.
- The model assumes a constant reward-to-risk ratio.
- Trading costs are excluded unless added in a future version.
- Correlated trades can increase real-world risk.
- Gaps and slippage can cause losses greater than planned.
- The model does not account for withdrawals or deposits.
- Monte Carlo results may vary slightly between runs.