Risk of ruin
See how often a trading system with a real edge still suffers a crippling drawdown purely through bad luck — and how strongly that depends on the risk you take per trade.
Runs entirely in your browserRuns entirely on your device — nothing you type is sent anywhere. Educational only, and not investment advice.
How to use this calculator
Each step names a control you will find on screen above.
- Win rate
The share of your trades that make money, from your own records rather than from hope. Fifty honest trades tell you more than a backtest you tuned.
- Reward : risk
Your average winner divided by your average loser. 2 means a typical win is twice a typical loss.
- Risk per trade
The share of current capital you lose when a stop is hit. This is the input that decides survival.
- Drawdown you’d call ruin
The fall from a peak at which you would stop trading or abandon the system. Be honest: for many people it is nearer 30% than 50%.
- Number of trades
How far ahead to look. More trades give luck more chances to produce a bad run.
Worked example: A 45% win rate paying 2:1
A swing trader wins 45% of trades, with winners averaging twice the losers. They risk 2% of capital a trade and would give up after a 50% drawdown. Look 200 trades ahead.
What to enter
- Win rate
- 45%
- Reward : risk
- 2 : 1
- Risk per trade
- 2%
- Drawdown you’d call ruin
- 50%
- Number of trades
- 200
What it shows you
- Chance of ruin
- 0.0%
- Expectancy / trade
- +0.35R
- Typical worst drawdown
- 17%
- Typical ending capital
- 3.70×
Where this is taught
A calculator gives you a number. These explain what the number means and when it misleads you.
- Technical Analysis12 minRisk of ruin: the arithmetic that decides if you surviveA positive-expectancy system can still destroy an account. The variable that decides it is size — and the relationship is far less forgiving than it looks.
- Market Basics9 minThe arithmetic of a loss: why a 50% fall needs a 100% gainA 50% fall does not need a 50% rise to recover — it needs 100%. The asymmetry between a loss and its recovery is the arithmetic behind every rule about protecting capital.
- Risk & Psychology11 minAfter a big lossThe decisions taken in the weeks after a serious loss usually cost more than the loss itself. What to do first, what to avoid, and how to come back properly.
- Technical Analysis12 minCutting false signals without cutting the good onesEvery filter that removes bad trades removes some good ones too. How to measure that trade-off instead of guessing at it.
- Technical Analysis12 minDrawdown, not volatility, is what you actually feelVolatility is a statistic. Drawdown is the number that makes people sell. How to read the underwater curve, and why recovery time matters more than depth.