Risk of ruin calculator
Estimate the chance of reaching a loss limit over a set number of trades.
Trading assumptions
Change the example, then calculate your risk.
Share of trades that win.
Average win ÷ average loss.
Current equity risked.
Loss that counts as ruin.
1–1,000 whole trades.
Risk of ruin
Chance of reaching the loss limit from starting equity.
- Peak drawdown risk
- 6.7%
- 95% simulation interval
- 1.19–1.65%
How this is calculated
Each win multiplies current equity by (1 + risk × win/loss ratio). Each loss multiplies it by (1 − risk). We count paths that reach or cross the selected loss limit at any point.
140 of 10,000 paths reached the starting-equity loss limit. 670 reached the same loss percentage from their running high.
The model uses your inputs for 100 trades per path. Changing inputs clears this result until you calculate again.
10,000 reproducible paths, seed 1729. Trades are independent, with a constant win rate and payoff ratio. Risk is a fixed share of current equity. Ruin is measured from starting equity; drawdown is measured from each path’s running high. Use net-of-cost win/loss assumptions. The interval covers simulation sampling error, not uncertainty in your assumptions. Zero observed failures does not prove zero risk.
Reference: Myfxbook · Risk of ruin and drawdownHow to use this calculator
- Enter your win rate and average win/loss ratio. Use results after trading costs if you want costs reflected in the scenario.
- Choose the percentage of current equity risked per trade, a loss limit and the number of trades.
- Select Calculate risk. Compare the estimated starting-equity loss risk with the risk of a drawdown from a running high.
Example: a 50% loss limit over 100 trades
Use Reset example to reproduce these inputs.
- Win rate / win-loss ratio
- 50% / 1.5×
- Risk per trade
- 5% of current equity
- Loss limit / trades
- 50% / 100
Estimated risk of ruin: 1.4%
With the reset example and fixed seed, 140 of 10,000 simulated paths reach a 50% loss from starting equity. A 50% drawdown from a path’s running high occurs in 670 paths, or 6.7%. These are two different thresholds measured over the same trade horizon.
Frequently asked questions
Does ruin mean losing all of the account?
Here, ruin means reaching the loss limit you choose, measured from starting equity. A 50% limit counts a path that falls from 100 starting units to 50 or less. You can choose another threshold to represent the loss level you want to examine.
How is risk of drawdown different from risk of ruin?
Drawdown is measured from the highest equity reached along a path. For example, an account that starts at 100, rises to 150 and falls to 75 has lost 25% of its starting equity but drawn down 50% from its peak. The drawdown threshold can therefore be reached before the starting-equity loss threshold.
Why do identical inputs give the same estimate?
The calculator uses 10,000 paths and a fixed random seed so a scenario can be reproduced and compared. Each simulated trade uses the same win probability and payoff ratio, with risk sized as a fixed fraction of current equity. The model assumes independent trades.
Does 0% simulated risk mean the account is safe?
It means no simulated path reached the threshold in this run. The 95% interval describes sampling uncertainty within the stated model, including when no failures were observed. It does not account for incorrect win rates, changing market conditions or dependence between real trades.
Want to understand the calculation?
Explore Monte Carlo sampling