Run 10,000 simulated sequences of your trades to see how often a plan drags an account down to a loss level you set. Use it to compare position-sizing choices, not to predict what will happen to you.
Risk of Ruin
12.13%
Risk of Drawdown ≈ 36.56%
Warning
With these numbers you lose money on average. Over enough trades, ruin is close to certain no matter how small the risk per trade.
Risk of Drawdown is the chance that, at some point during the run, your balance falls by the loss level from its highest point so far. Risk of Ruin is the chance that it falls by the loss level from your starting balance. Ruin always counts as a drawdown, so Risk of Drawdown is never lower than Risk of Ruin.
Risk warning
These percentages describe a simplified model, not your future. Real trading has losing streaks, slippage, changing markets, and an edge that drifts over time. Use the result to compare position-sizing choices, not to predict an outcome.
A 50% win rate with an equal average win and loss is a 1:1 reward-to-risk ratio, which comes out to zero expectancy. Over 200 trades, risk of ruin is 45.74% and risk of drawdown reaches 81.21%: without an edge, the account drifts toward ruin on its own.
A 55% win rate paired with a 1.5:1 reward-to-risk ratio gives positive expectancy on every trade. Keeping risk per trade down to 1% brings risk of ruin to 0.40% over 100 trades.
How this is calculated
This tool runs 10,000 simulated sequences of the number of trades you enter. Each trade wins with a probability equal to your win rate. A win adds risk per trade × (average win ÷ average loss) to the balance, and a loss subtracts risk per trade, both as a percentage of the balance at that moment. The random sequence uses a fixed seed, so the same inputs always give the same result. It assumes every trade is independent and your win rate and payoff stay constant, which real trading does not guarantee.
What each variable means:
Win rate only tells half the story. A trader who wins 70% of trades can still have a negative expectancy if each loss is several times larger than each win. Compare Example 1 and Example 2 above. A 50% win rate with a 1:1 reward-to-risk ratio has zero expectancy, while a 55% win rate with a 1.5:1 ratio turns solidly positive. The payoff on each trade matters as much as how often it wins.
Risk of ruin doesn't grow in a straight line as risk per trade increases. Compounding losses mean that doubling your risk per trade can more than double your chance of hitting the loss level. That's because a string of bad trades compounds against a smaller and smaller balance. Small, steady risk keeps that compounding effect from working against you as hard. Testing a plan at 1%, 2%, and 5% risk per trade side by side usually makes the difference clear.
The simulation uses a fixed random seed, so the same inputs always produce the same 10,000 sequences and the same result. This makes the tool useful for comparing plans side by side, since any difference you see comes from the numbers you changed, not from randomness.
The Drawdown Calculator shows a single fixed sequence of consecutive losses and how far the balance falls. This tool runs 10,000 different random sequences that mix wins and losses, and reports how often the outcome crosses your loss level. Use the Drawdown Calculator to see a worst case play out step by step, and this tool to see how likely something like it is.
No formula can say for certain whether a specific run of trades will succeed, because trading outcomes are random within the odds you set. A probability across thousands of simulated sequences is the honest way to describe that uncertainty, and it lets you compare one plan against another on equal terms.
Not on its own. A high win rate paired with a small average win and a large average loss can still produce negative expectancy and a high risk of ruin. What matters is the combination of win rate and reward-to-risk, not win rate alone.
Every sequence that hits the ruin level has, by definition, also fallen that far from its peak, so it always counts toward risk of drawdown too. Some sequences fall by the loss level from a peak reached mid-run without ever falling that far from the very start, so risk of drawdown adds more cases on top.
See how a string of consecutive losses shrinks an account, trade by trade.
Example 10 losses at 2% each = 18.29% drawdown
Open toolWork out the right lot size from your account balance and the risk you accept per trade.
Example $1,000 account, 2% risk, SL $2.00 = 0.10 lot
Open toolThese ideas come from Chapter 07: Risk and Money Management →