Risk of Ruin Calculator
Risk of ruin estimates the probability that a string of losses wipes out your account before your edge plays out. Enter your win rate, payoff ratio (average win ÷ average loss), and the percentage of capital you risk per trade. The tool reports an approximate probability of ruin using a standard fixed-fraction model. It is an approximation for planning — not a guarantee — but it makes the danger of over-sizing vivid: even a positive edge can ruin you if you bet too big.
Expected value per trade (R)
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Approx. risk of ruin
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Frequently asked questions
How is risk of ruin estimated? +
This tool uses a standard fixed-fraction approximation: it derives a per-trade edge from your win rate and payoff ratio, treats your account as units of risk (100 ÷ risk %), and applies the classic ruin formula ((1 − edge) / (1 + edge)) raised to the number of units. It is an estimate, not a precise probability.
Why does a positive edge still show risk of ruin? +
Because variance is real. With a small edge or large per-trade risk, an unlucky losing streak can still drain the account before the edge compounds — which is why sizing matters as much as the edge itself.