Advanced Risk Analytics

Risk of Ruin Calculator

Determine the mathematical probability of blowing your trading account. A must-use tool for evaluating the long-term sustainability of your strategy.

Strategy Stats

Win Rate

Reward/Risk Ratio

Risk Per Trade

What is Ruin?

"Ruin" occurs when you lose 100% of your trading capital. Even with a 60% win rate, if you risk too much per trade (e.g. 20%), your mathematical probability of ruin is near 100% due to normal losing streaks.

Probability of Ruin

0.00%

Mathematical Safety

Probability of 50% Drawdown0.0%

Kelly Criterion (Optimal Risk)

25.00%

The mathematical limit of risk before expectancy turns negative.

Strategy Expectancy0.50 R

System Analysis: This is a statistically robust plan. Your risk management is well-balanced for your strategy's performance.

Understanding the Risk of Ruin

What is Risk of Ruin?

Risk of Ruin is a concept in gambling and trading that refers to the probability that a person will lose all their capital (reach a state of "ruin") because of a sequence of losses, even if the person has a strategy with a positive expected return.

Expectancy vs. Ruin

A strategy can have a positive expectancy (meaning it makes money on average) but still have a 100% risk of ruin. This happens when the risk per trade is too large. If you risk 50% of your account per trade, you only need two losses in a row to reach 0. Even with a 90% win rate, a 2-trade losing streak will happen eventually.

How to Lower Your Risk

Reduce Risk Per Trade: Moving from 5% risk to 1% risk often drops the risk of ruin from 50% to near 0%.
Increase Win Rate: Better entry selection can improve the math, but this is the hardest variable to control.
Improve Reward/Risk: Aiming for 2:1 or 3:1 trades gives you a much larger "cushion" for losing streaks.
Stop Trading During Drawdowns: Taking a break after a series of losses can protect you from the "emotional" risk of ruin.

This calculator is part of our advanced library of cryptocurrency calculators. Explore the fullCrypto Trading Toolsto optimize your strategy and manage risk like a professional.