Risk of Ruin Calculator
The probability that a normal losing streak ends your account.
The formula
Edge A = (Win% × Payoff) − (Loss%)
Risk of Ruin = ((1 − A) / (1 + A))^U
U = capital in risk-units = 100 ÷ Risk% per trade
The classic fixed-fractional model: with a positive edge of A per unit risked and U units of capital, ruin requires an unlikely sustained deviation. The smaller your risk per trade, the more units you hold and the steeper the exponent works in your favor.
What the pros target
- Risk of ruin under 1–5% at live sizing
- 0.5–1% risk per trade until the edge is proven over 100+ trades
- Payoff ratio above 1.5 so win rates near 40–50% still compound
The catch
The formula assumes you actually keep risk per trade constant. In practice, ruin usually arrives via the trades you took at 3× your normal size after two losses. A journal with pre-trade guardrails is how the assumption survives contact with reality.
Keep your sizing honest, trade by trade
LogYourTrade checks every trade against your risk rules before you take it — the guardrail between the model and the moment.
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