Risk of Ruin Calculator

Risk of ruin is the chance that a run of losses takes your account down to a set loss level. Expectancy (R) = win rate × reward:risk − (1 − win rate); the risk rises as you risk more per trade.

Risk of ruin is the chance that a run of losses takes your account down to a level you could not come back from. Enter your win rate, the size of an average win compared with an average loss, and the percentage you risk per trade. The calculator simulates 5,000 accounts trading the same way and shows how many hit your ruin level.

1. Win rate (%):

2. Reward : risk (1 : x):

Average win ÷ average loss. 2 = wins are twice the size of losses.

3. Risk per trade (%):

4. Ruin = account down (%):

The loss from your starting balance you would treat as the end.

5. Number of trades:

Risk of ruin

<0.1%

chance of losing 50% within 500 trades

Expectancy per trade:+0.20R

Median ending balance:257% of start

Accounts ending in profit:99.8%

Based on 5,000 simulated accounts with the same inputs; trading stops when an account hits the ruin level. Trading costs are not included unless you lower the reward : risk to allow for them.

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How risk of ruin is calculated

Expectancy (R) = Win rate × Reward:risk − (1 − Win rate)

Each trade: win → Balance × (1 + Risk % × Reward:risk); loss → Balance × (1 − Risk %)

Risk of ruin = Simulated accounts that fall to the ruin level ÷ All simulated accounts

Expectancy is the average result per trade in units of the amount risked (R). Above zero, the strategy makes money on average; at or below zero, it loses over time and risk of ruin rises towards 100% as you trade longer.

With fixed-percentage risk the balance never reaches exactly zero, so ruin is defined as a loss you choose, such as 50% of the starting balance. Wins and losses are drawn at random in each simulated account; the same inputs always give the same result. Closed-form formulas exist for simple cases, but a simulation handles any win rate and reward:risk.

Worked examples

40% win rate, 1:2, 1% risk

Expectancy = 0.4 × 2 − 0.6 = +0.20R
Ruin = down 50%, over 500 trades
Risk of ruin: <0.1%
Median ending balance: 257% of start

A positive edge with small risk: ruin is <0.1%.

Same edge, 10% risk per trade

Expectancy is still +0.20R
Ruin = down 50%, over 500 trades
Risk of ruin: 47.6%
Accounts ending in profit: 52.2%

Oversizing alone lifts the risk of ruin to 47.6%.

45% win rate, 1:1, 2% risk

Expectancy = 0.45 × 1 − 0.55 = −0.10R
Ruin = down 50%, over 500 trades
Risk of ruin: 87.7%
Accounts ending in profit: 0.6%

With a negative edge, small risk only slows the loss: ruin is 87.7%.

Simulation results for 5,000 accounts, before trading costs. Enter the same inputs above to reproduce them.

Frequently asked questions

What is risk of ruin in trading?

Risk of ruin is the probability that losses take an account down to a set level, for example half of the starting balance, from which you would stop trading. It depends on win rate, reward-to-risk and how much you risk per trade.

What is a good risk of ruin?

As close to zero as you can get for the ruin level you choose. With a positive expectancy, cutting the risk per trade is the most direct way to lower it; with a zero or negative expectancy, no position size makes it safe.

How does risk per trade affect risk of ruin?

Strongly. With a 40% win rate and 1:2 reward-to-risk, the simulation gives <0.1% risk of a 50% loss over 500 trades at 1% risk, and 47.6% at 10% risk, with the same edge.

What is expectancy?

Expectancy is the average result per trade in multiples of the amount risked: win rate × reward:risk − loss rate. A 40% win rate with 1:2 gives +0.20R, so each $100 risked returns $20 on average over many trades, before costs.

Do trading costs change the risk of ruin?

Yes. Spread and commission shrink every win and enlarge every loss, which lowers the expectancy. A rough way to include them is to lower the reward:risk you enter.

Trading from India or Nigeria? Check the rules first

India

Exness, XM, Vantage Markets, IC Markets and Forex4you are named on the Reserve Bank of India's Alert List of entities not authorised to deal in forex or to operate electronic trading platforms (ETPs) for forex transactions (Alert List updated as on November 19, 2025). Source: Reserve Bank of India: Alert List (updated as on November 19, 2025); Outlook Money: RBI's updated Alert List
Markets4you is the new name of Forex4you (rebrand reported in 2024). The RBI Alert List names Forex4you (forex4you.com); it does not list the name Markets4you. Source: Reserve Bank of India: Alert List (updated as on November 19, 2025); Finance Magnates: Forex4you becomes Markets4you
Under FEMA, resident persons may undertake forex transactions only with authorised persons and for permitted purposes; electronic forex transactions must be undertaken only on ETPs authorised by the RBI or on recognised stock exchanges (NSE, BSE, MSE). Residents who trade forex on unauthorised ETPs are liable to penal action under FEMA. Source: Reserve Bank of India: FAQs on unauthorised forex trading platforms
The RBI says the Alert List is not exhaustive: an entity that is not on it should not be assumed to be authorised by the RBI. Source: Reserve Bank of India: FAQs on unauthorised forex trading platforms

Nigeria

The Securities and Exchange Commission (SEC) Nigeria says that under the Investments and Securities Act (ISA) 2025 it is an offence to operate an online foreign exchange (forex) trading platform in Nigeria without SEC registration. Source: FinancialEDGE: SEC warns unregistered digital and forex trading platforms now a crime under ISA 2025; Gazette Nigeria: ISA 2025 bans unregistered digital asset exchanges, online forex platforms

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