Free trading tools
Risk of Ruin Calculator
Use this risk of ruin calculator to estimate whether your risk per trade and strategy edge can survive bad trade sequences.
Best for
Traders checking whether risk per trade is too aggressive for their edge.
What you get
Estimated ruin probability, survival probability, expected edge, and risk warning.
Not for
Exact actuarial modeling, changing market regimes, or guaranteeing future drawdowns.
Formula
Risk of ruin is estimated by simulating trade sequences against a ruin threshold.
Example
A strategy risking 2% per trade with low edge can show much higher ruin risk than the same edge risking 0.5%.
Hexaplan verdict
Use this beside Monte Carlo to see whether position sizing can survive bad sequences.
Risk of ruin estimate
This calculator simulates simplified trade sequences and counts how often the account hits the selected ruin threshold.
Risk of ruin example
Increasing risk per trade from 0.5% to 2% can sharply increase the chance of hitting a severe drawdown threshold.
Common ruin-risk mistakes
- Risking too much per trade.
- Overestimating win rate.
- Ignoring losing streaks.
- Stopping analysis at average return.
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FAQ
Does this use Monte Carlo?
It uses a simplified deterministic simulation set to estimate ruin frequency.
How do I reduce ruin risk?
Lower risk per trade, improve expectancy, reduce costs, or stop trading weak setups.