Risk of Ruin Calculator
Stop guessing. Calculate the exact mathematical probability of blowing your account based on your strategy's win rate and risk-reward ratio.
Eliminate mathematical ruin with the Raptor EA. 100% automated risk control.
Risk of Ruin Calculator
Calculate the mathematical probability of blowing your account.
Strategy Metrics
Risk Management
High Risk of Ruin
Your risk per trade is too high for your win rate. A normal losing streak will likely breach your drawdown limit.
Expected Value (EV)
Average R multiple per trade
+0.20R
Risk of Ruin (100 Trades)
45.47%
Probability of hitting 10 consecutive losses
The Complete Guide to Risk of Ruin in Forex Trading
In quantitative trading and finance, the Risk of Ruin (RoR) is the statistical probability that you will lose your entire trading capital (or hit a predetermined maximum drawdown limit) before achieving a meaningful profit.
Many retail traders focus entirely on their Win Rate. However, mathematically, even a highly profitable strategy with a 60% win rate and a 1:2 risk-to-reward ratio can have a 100% Risk of Ruin if the trader risks too much per trade (e.g., 10%). A normal statistical losing streak will mathematically guarantee the destruction of the account before the edge has time to play out.
Why Expected Value (EV) is the Holy Grail
Before worrying about risk management or position sizing, your trading strategy must have a positive Expected Value (EV). EV is the average R-multiple you can mathematically expect to make per trade.
If your EV is negative, no amount of money management, hedging, or compounding will save you. A negative EV means you are mathematically guaranteed to reach ruin over a large enough sample size. This is why casinos always win in the long run.
The Danger of Consecutive Losses
Our calculator uses binomial probability to show you the likelihood of hitting a losing streak large enough to breach your drawdown limit. Human brains are notoriously bad at grasping probability.
- If you risk 2% per trade, it takes only 5 consecutive losses to hit a standard 10% prop firm drawdown limit.
- Even with a massive 60% win rate, there is a roughly 1% chance you will hit 5 consecutive losses in your next 100 trades.
- If you take 1,000 trades a year, hitting that losing streak becomes a virtual certainty.
How to Lower Your Risk of Ruin to < 0.01%
1. Drastically Lower Risk Per Trade: The easiest way to survive statistical variance is to lower your risk. Dropping your risk from 2% to 0.5% per trade changes your "ruin point" from 5 losses to 20 consecutive losses, dropping the probability of ruin to near absolute zero.
2. Increase Asymmetrical Risk/Reward: A strategy with a 1:3 risk-to-reward ratio only requires a 26% win rate to maintain a positive expectancy. When your winners are 3x larger than your losers, it takes significantly fewer wins to recover from a deep losing streak.
3. Automate Your Execution: Discretionary traders often ruin their EV by taking profits too early (lowering their Risk/Reward) or moving their stop losses (increasing their Loss Rate). Using a fully automated MT5 Expert Advisor ensures your EV remains mathematically pure across thousands of trades.
Is Your Strategy Mathematically Flawed?
Remove human emotion and trade a system with a statistically verified positive expectancy. Our Raptor EA is backtested to ensure a mathematically impenetrable Risk of Ruin.