Risk of Ruin Calculator

Risk of Ruin Calculator for Forex and Trading Strategies

User Instructions

Input Options

Win rate %: Enter the overall win rate percentage of the trading system, for example, 50%.

Average profit / loss: Enter the ratio of average profit to average loss (odds), using 1: 1 as an example.

Risk per trade %: Enter the percentage of total capital that each trade loss represents, for example, 2%.

Number of trades: Enter the expected number of trades or the total number of trades conducted so far, for example, 100 trades.

Max drawdown %: Enter the maximum drawdown percentage of the current trading strategy, for example, 30%.

Calculation Result

Risk of peak-to-valley drawdown: Display the probability that the account balance at the end of N trades is lower than the account balance at the beginning.

Risk of ruin: Display the probability of losses reaching the preset maximum loss percentage.

* Please note that the output of the calculator may vary, as it is based on simulated scenarios of N trades repeated multiple times.

What is the risk of ruin?

The risk of ruin (RoR, Risk of Ruin) is a mathematical model used to calculate the probability of losing the entire account balance based on the win rate, payout ratio, and percentage of loss per trade of a trading system.

For example, if the trader's system performs well, with a win rate of 30%, an average profit/loss (profit factor) of 2, and a loss percentage per trade of 2%, this data can be added to the risk calculator to understand the overall robustness of the trading system. At the same time, the calculator can also be used to control the risk of strategy ruin and/or peak-to-valley drawdown.

With this calculator, traders can know the chances of their trading account being liquidated over time when using a specific trading strategy. This is based on the win rate percentage of each trade and the average risk percentage. By inputting the performance statistics of the trading system into the calculator, traders can easily calculate the risk of ruin for any trading strategy.

By changing the total number of trades and the assumed maximum drawdown percentage, calculate some random results and fine-tune the trading system.

You may also find our drawdown calculator useful. It can help accurately calculate how the trading account's net value will be affected after a series of losing trades.