Opens in a new tab
Skip to content
Find my broker

Risk of ruin calculator

Estimate the probability of reaching the selected loss threshold within the number of trades entered.

Risk of ruin within 1,000 trades
3.82
%

Enable JavaScript to calculate your result.

Estimate the probability of reaching the selected loss threshold within the number of trades entered. The default is 1,000 trades. Risk is a fixed percentage of the remaining balance on each trade. The model assumes independent trades with a constant win rate and reward-to-risk ratio. The threshold is a loss from starting equity, not a fall from a later peak. Paths stop at the threshold. This is a model estimate; fees, gaps and changing trade outcomes are excluded.

Risk of ruin at other risk levels within 1,000 trades
Risk per tradeRisk of ruin
0.5%< 0.01%
1%3.82%
2%36.89%
3%61.84%

How to use the risk of ruin calculator

  1. Enter a win rate and the average win divided by the average loss.
  2. Set the percentage of remaining equity risked on each trade.
  3. Choose the loss threshold from starting equity and enter the number of trades, from 1 to 1,000.
  4. Read the probability within the entered number of trades and compare the four risk levels using the same trade count.

Formula

Let p be the win probability, R the reward-to-risk ratio, r the risk fraction and D the loss-threshold fraction.After w wins and l losses, equity relative to the starting balance is (1 + rR)^w × (1 − r)^l.At each trade, a surviving path branches into a win with probability p and a loss with probability 1 − p.A path reaches the threshold when its equity is at or below 1 − D. It then stops and remains counted as having reached the threshold.The loss threshold is measured from starting equity, not from a later peak.Add the probabilities of paths that reach the threshold at any point within the entered number of trades. This is a finite absorbing-barrier model.50% wins, 1:1 payoff, 1% risk and a 50% loss threshold: approximately 3.82% within 1,000 trades.

FAQ

What does the loss threshold mean?

It is the loss from starting equity, not a fall from a later peak. A path counts as ruined if it reaches that threshold at any point within the entered number of trades, even if continuing it could produce a recovery.

How is the probability calculated?

The model follows winning and losing paths for the entered number of trades and adds the probabilities of paths that reach the threshold. Trades are independent, with a constant win rate and reward-to-risk ratio. Each trade risks the entered percentage of remaining equity. Numerical precision and calculation limits apply.

Can a result near 100 percent mean certainty?

Rounding does not establish certainty. A probability confirmed above 99.99% but below 100% is shown as greater than 99.99%. A positive probability confirmed below 0.01% is shown as less than 0.01%. If numerical precision cannot establish which side of a display boundary the probability lies on, the boundary is shown as a rounded value.

Other tools

Position size calculatorLot size from balance, risk and stop loss, with a gold (XAUUSD) mode.Pip value calculatorWhat one pip is worth on any pair and lot size.Compound interest calculatorHow your account grows when you reinvest returns.Average cost (DCA) calculatorYour average entry price across several buys.Forex market hoursWhen the Sydney, Tokyo, London and New York sessions overlap.Risk/reward calculatorCompare per-unit and position risk, target payoff and break-even win rates before and after costs.Trading journalRecord closed trades, costs and initial risk in a workbook.

Put your plan into practice

All reviewed brokers →
How we rate