how to use the risk of ruin calculator
- Enter your starting bankroll and the share of the current bankroll you bet per trade.
- Enter your win rate, what winners end at and what losers lose.
- Enter the number of trades and the level you call ruin (20% means you stop below a fifth of the start).
- Read the ruin probability, the chance to double and the percentile outcomes.
formula
each trade: bankroll += bankroll × bet × (outcome multiple − 1) ruined if bankroll ≤ ruin level at any point 10,000 runs, fixed random seed
why bet size decides survival
Two traders with the same edge can end up in opposite places. Betting 5% of the bankroll per trade survives a streak of ten losses with 60% of the money left; betting 30% leaves under 3%. Ruin comes from bet size combined with variance, not only from a bad strategy. Try the same numbers at 5%, 10% and 25% per trade and watch the ruin probability.
reading the result
The median is what a typical trader with your numbers ends with. The 10th percentile is an unlucky but entirely normal outcome: one in ten traders does worse. If the unlucky outcome would end your trading, the bet size is too big even if the median looks great.
frequently asked questions
What is risk of ruin in trading?
The probability that losses shrink a bankroll below a level from which you can no longer trade, over a given number of trades.
How do I lower my risk of ruin?
Bet a smaller share of the bankroll per trade, cut losing trades earlier (a smaller average loss), or improve the win rate or payout. Bet size is the lever you control fully.
Why use a simulation instead of a formula?
Closed-form risk of ruin formulas assume fixed bet sizes and simple wins and losses. A Monte Carlo simulation handles percentage bets and any payout, and shows the whole range of outcomes, not one number.
Updated . Free, no sign-up, runs in your browser. Not financial advice.