Risk of Ruin Calculator
Set a maximum drawdown, a risk per trade and your own win rate below, and the simulator runs thousands of seeded paths to report the share that survive — the same free engine behind every firm evaluation on this site, asked about your numbers instead of a firm's.
Max Drawdown in this widget is a static floor from starting balance (v1) — a fixed floor measured from your starting balance, not a floor that ratchets upward with a new equity peak. Ruin share below is counted against this static floor from starting balance. A firm Max DD that trails uses F = M − A; that floor is never easier at equal allowance, and this widget does not apply it.
The field that answers "risk of ruin" most directly is Max drawdown you allow — it is the floor the simulation runs your win rate, average R and risk per trade against.
Same engine at the same free accuracy — save a rule set, add a stop, or import a history. The stamped file is written after that run, not from this typed-average result.
The mechanism
"Risk of ruin" is the probability that a losing streak reaches an unrecoverable floor before a positive edge has had time to compound. It is a different question from "am I profitable on average" — a trader with a genuine positive expectancy can still carry a high risk of ruin, because the streak that ends the account can arrive before the edge pays out. A useful first-pass intuition, used across this site, is a "lives" count: how many consecutive max-size losses your drawdown room can absorb.
lives = drawdown room ÷ risk per trade. At a fixed 10% drawdown allowance, the number of lives falls as risk per trade rises — not linearly in the odds of survival, but the room itself divides exactly:
| Risk per trade | Lives (10% allowance ÷ risk) |
|---|---|
| 0.5% | 20 |
| 1% | 10 |
| 1.5% | 6.7 |
| 2% | 5 |
| 3% | 3.3 |
Lives is a count, not a probability — it says nothing about win rate, sequencing, or a daily loss stop that can end a session before the total floor is even threatened. That is exactly what the calculator above computes instead: real win/loss sequences, drawn from a seeded random stream, run out thousands of times, with the account's actual current path against the actual current floor checked after every simulated trade.
What changes the number
Three inputs move risk of ruin, and they don't move it equally. Win rate and average win/loss are what the market gives a given strategy — they are read from a trader's own history, not chosen. Risk per trade is the one number a trader sets directly, which is why the position sizing calculator treats it as the whole subject. A horizon (trading days) and an optional daily loss stop both give a losing streak more or fewer chances to reach the floor before the run ends, which is why they are separate fields above rather than folded into the drawdown number.
The survival share above is counted against a static floor from starting balance. At equal allowance a trailing floor is never easier (F = M − A) — the trailing drawdown calculator holds that identity.
Related: the same survival math is behind the survival days and loss-streak probability calculators; the drawdown-recovery-time calculator shows what it takes to climb back after a drawdown — and the Monte Carlo trading simulator is this same engine run on your own numbers.
To apply the same seeded engine to your own max-drawdown and daily-loss rules — not a named firm — use the personal rules simulator.
FAQ
- What is risk of ruin?
- The probability that an account reaches an unrecoverable floor — a stated maximum drawdown — before a positive edge compounds, computed by simulating many independent trading sequences from the same win rate, average win and average loss and counting the share that breach the floor.
- How does this calculator compute risk of ruin?
- It runs a seeded Monte Carlo simulation — thousands of trade-by-trade paths built from the win rate, average win (R) and average loss (R) entered above — and reports the share of paths that respect the stated drawdown, daily loss and horizon, exactly reproducible from the same inputs and the same seed.
- Is a lower risk per trade always safer?
- It always adds more "lives" (drawdown room divided by risk per trade), but the relationship between risk per trade and simulated survival probability is not linear — win rate and the reward-to-risk ratio both interact with it. The calculator above re-runs the full simulation for any combination entered, which is why it exists instead of a single rule of thumb.
Run it against your own numbers
The same engine, unlimited runs, at the same free accuracy as this page's calculator — open the full personal rule editor to save a rule set, add a profit goal or daily loss stop, or import a trade history.
Open the personal rule editor — free, full accuracy →Rules and outcomes vary by firm and by trader; nothing on this page is investment or trading advice, and PropSurvival is not affiliated with, endorsed by, or sponsored by any prop trading firm. This calculator models a stated rule set — it does not predict market outcomes.