Free tool

Risk of Ruin Calculator — How Likely Is Your Account to Blow Up?

The probability of blowing your account is not a feeling — it is a number. This risk of ruin calculator runs thousands of Monte Carlo simulations of your win rate, payoff ratio and risk per trade, and counts how many equity curves hit your ruin threshold before reaching your goal. Instantly, no login.

Your strategy

Win rate (%) 50%

Payoff ratio (average win in R)

Risk per trade (%) 1%

Number of trades

Ruin & goal

Ruin threshold (% drawdown) Account considered ruined at −X% from start. For prop firm accounts, enter the max drawdown limit, usually 6–10%.

Profit goal (%)

Simulations

Risk of ruin

—

chance of hitting the ruin threshold

Chance of reaching goal

—

hits +20% at some point

Median final balance

—

as % of starting balance

Expected max drawdown

—

median of each simulation's worst peak-to-trough

Know the stats you are simulating

This simulator is only as good as the win rate and payoff you feed it. The ReziFX Chrome extension captures your planned trades from the TradingView position tool — entry, stop, target, R:R and a screenshot — so your journal computes those numbers from real trades automatically.

Try ReziFX free Drawdown recovery calculator

Sensitivity: risk per trade vs. risk of ruin

Same win rate, same payoff, same number of trades — only the risk per trade changes. 2,000 simulations per row, using your current inputs above.

Risk per trade	Risk of ruin	Chance of reaching goal
0.25%	—	—
0.5%	—	—
1%	—	—
1.5%	—	—
2%	—	—

Why doubling your risk more than doubles your ruin

Ruin is driven by losing streaks. With percent-based sizing, each loss multiplies your capital by (1 − risk): at 1% risk, ten straight losses leave 0.99¹⁰ ≈ 90.4% of your capital; at 2% risk the same streak leaves 0.98¹⁰ ≈ 81.7%. Deeper holes also need disproportionately larger gains to climb out of, so the same strategy traded at double size does not have double the ruin probability — it has far more. The sensitivity table above demonstrates this with your own numbers.

The classic gambler's ruin formula — for even-money bets, the probability of losing a bankroll of k units is ((1 − p) ÷ p)ᵏ when p > 0.5 — is elegant but built on assumptions trading violates: it assumes every win and loss is the same size, bets do not compound, and play continues forever. Real strategies have unequal payoffs, percent-based compounding and a finite number of trades.

That is why this calculator uses Monte Carlo simulation instead: it generates thousands of random equity curves with your exact win rate, payoff ratio and risk per trade — win: capital × (1 + risk × payoff), loss: capital × (1 − risk) — and counts how many touch the ruin threshold (once ruined, a curve stays ruined) and how many touch the profit goal. The result is an honest estimate for a finite, compounding, unequal-payoff world, not an idealised coin-flip game.

Frequently asked

What is risk of ruin in trading?

Risk of ruin is the probability that your account equity falls to a level you define as ruined — for example −50% for a personal account, or the 6–10% maximum drawdown limit of a prop firm account — before your edge has time to play out. It depends on win rate, payoff ratio, risk per trade and how many trades you take. Even a profitable strategy has a non-zero risk of ruin if position sizes are too large.

What risk per trade keeps risk of ruin low?

You can test it directly in this calculator: with a typical edge (for example 50% win rate at 1.5R payoff), the simulated ruin probability at 0.25–0.5% risk per trade is usually far below the same strategy at 2%, over the same number of trades. The relationship is strongly non-linear — doubling risk per trade much more than doubles ruin probability — which is why the sensitivity table shows ruin at five different risk levels for your exact stats.

Does risk of ruin apply to prop firm accounts?

Yes — even more sharply. For a funded or challenge account, set the ruin threshold to the firm's maximum drawdown limit, typically 6–10%. Because that threshold is far tighter than the 50% many retail traders imagine as "blowing up", the simulated ruin probability is much higher at the same risk per trade. This is why funded traders usually risk 0.25–0.5% per trade rather than 1–2%.

Why use Monte Carlo instead of the classic risk of ruin formula?

The classic gambler's-ruin formula assumes even-money bets, fixed bet sizes and an infinite time horizon. Real trading has unequal payoffs (winners and losers of different size), percent-based position sizing that compounds, and a finite number of trades. Monte Carlo simulation models all three directly: it replays thousands of possible equity curves with your actual statistics and simply counts how many hit the ruin threshold.

Educational tool. Not financial advice — trading involves substantial risk of loss.