Risk of Ruin Calculator
Evaluate whether your position sizing and win rate can survive random loss clusters, or if your parameters mathematically guarantee liquidation.
Statistical Ruin Output
Institutional Grade (< 0.01%)Institutional Safety: Your buffer and edge provide sufficient statistical cushion to survive typical 6–9 trade losing streaks.
Trading for FTMO, Apex, or Topstep?
See how TJP enforces prop drawdown limitsUnderstanding the Mathematics of Risk of Ruin
The Gambler's Ruin concept demonstrates that even with a statistically profitable trading strategy (positive expectancy), an account can easily be wiped out if the trader's position size is disproportionate to the allowable drawdown threshold.
Markets exhibit variance and clustering of losses. A 50% win rate system can routinely experience 6 to 9 consecutive losses across a sample of 200 trades. If you risk 5% per trade, an 8-trade losing streak will destroy nearly 35% of your equity, leaving you mathematically crippled.
Risk Per Trade vs Drawdown Probability (100 Trades Sample)
| Risk Per Trade | Consecutive Losses to 20% DD | Probability of Ruin (50% WR, 1.5R) | Recovery Difficulty |
|---|---|---|---|
| 0.5% | 45 trades | < 0.1% | Minimal (needs +25% to break even) |
| 1.0% | 22 trades | ~ 0.5% | Manageable (+25% gain needed) |
| 2.0% | 11 trades | ~ 8.2% | Severe emotional tilt trigger |
| 5.0% | 4 trades | > 54.0% | Near-guaranteed liquidation |
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