Risk of Ruin Calculator

Risk of ruin is the probability that a losing streak drives your account down to a hard limit — here, your prop firm max drawdown — before you reach your goal. It depends on your win rate, your reward-to-risk ratio and how much you risk per trade. Even a profitable strategy can have an uncomfortably high risk of ruin if you size too aggressively.

This tool runs a Monte Carlo simulation: thousands of random trade sequences using your win rate and reward-to-risk, tracking peak-to-current drawdown, and counting how often that drawdown reaches your max limit within the trade horizon. The result is the share of simulated runs that breached — your risk of ruin for that sizing.

Lower is always better; many professionals aim to keep it in low single digits. A double-digit risk of ruin means a normal, expected losing streak has a meaningful chance of ending your account before your edge plays out. The usual fix is not a better strategy but smaller risk per trade — halving your risk typically cuts risk of ruin sharply.

No. A positive edge means you win over a large enough sample, but variance still produces losing streaks in the short run. If your risk per trade is large relative to your drawdown limit, one of those streaks can breach you before the edge compounds. Expectancy tells you the long-run direction; risk of ruin tells you the odds of not surviving to get there.