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Risk of ruin calculator

Estimate the mathematical probability of losing your trading capital from win rate, risk per trade, and account capital units. A simple shock-factor calculator for risk discipline.

Ruin probabilityCapital unitsRisk discipline shock check
Calculator

Risk of ruin calculator

Results update instantly as you type. Check your broker's exact contract specs, spreads, commissions and margin rules before placing any trade.

This simplified model assumes equal-sized wins and losses. More advanced models use payoff ratio, volatility, Monte Carlo, and Kelly Criterion logic.

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Guide

Risk of ruin calculator: complete guide

A risk of ruin calculator estimates the chance that a trading system falls to a defined ruin threshold based on win rate, loss rate, capital units, and risk per trade. It is a risk discipline tool, not a prediction machine.

How risk of ruin works

Risk of ruin rises when process is weak, risk per trade is high, or the ruin threshold is close. Even a profitable strategy can face serious drawdown risk if position size is too aggressive.

Why risk per trade matters

Lower risk per trade creates more capital units and gives the strategy more room to survive losing streaks. High risk can make normal variance feel like system failure.

What the simplified model assumes

Simple risk of ruin formulas often assume equal win and loss size and stable probabilities. Real markets have changing volatility, slippage, spread, trader mistakes, and streak clustering.

01

Win rate

Win rate alone is not enough. Payoff ratio and average loss size also determine whether the process can survive.

02

Capital units

Capital units represent how many risk chunks exist before the ruin threshold. More units usually means lower ruin risk.

03

Ruin threshold

Ruin does not always mean zero. Many traders define ruin as a drawdown level where the strategy must stop.

04

Position sizing

The fastest way to lower risk of ruin is usually reducing risk per trade, especially during uncertain performance periods.

Risk of ruin and trader behavior

Mathematical ruin risk ignores emotional rule breaks. If your journal shows revenge trading, skipped stops, or size increases after losses, your real ruin risk is higher than the formula suggests.

Use it with TradeDoctor

The calculator gives the plan. Your journal proves the behavior.

After calculating the setup, log the trade in TradeDoctor AI to see whether actual risk, rules, emotions and outcomes matched the plan.

Plan day rules with Text Journal before the session.
Capture trades with Snap Journal, import, or fast manual entry.
Use AI Assistant to summarize journal patterns that calculators cannot capture.
Planned risk1.0%
Actual risktracked
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FAQ

Risk of ruin calculator FAQ.

Clear answers about using this calculator and applying the result in real trading decisions.

What is risk of ruin?
It is the estimated probability that capital falls to a defined loss threshold under a set of trading assumptions.
Does low risk of ruin guarantee profit?
No. It only describes risk under simplified assumptions. It does not prove that a strategy has a process.
How can I reduce risk of ruin?
Lower risk per trade, improve strategy process, reduce costs, avoid rule breaks, and stop trading systems that no longer perform.
Is this financial advice?
No. It is an educational risk model.

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