Risk of Ruin Calculator
Calculate the statistical probability of hitting your maximum drawdown limit.
Strategy Inputs
Analysis
Note: Calculation uses Balsara's Risk of Ruin equation. It assumes fixed parameters and does not account for variable positional sizing or changing market dynamics.
What is Risk of Ruin
In trading, Risk of Ruin is a mathematical concept used to calculate the probability of losing your entire trading capital (or hitting an unacceptable maximum drawdown point) based on your system's win rate, risk/reward metric, and risk per trade.
Many retail traders focus entirely on their win rate and ignore the statistical reality of a losing streak. Using this calculator allows you to mathematically prove the long-term viability of your trading edge. A robust strategy should yield an extremely low percentage probability of hitting your drawdown limit, typically under 1%.