Estimate the probability that your win rate, payoff ratio and risk per trade eventually drive the account down to your ruin point.
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Risk of ruin is the probability that a strategy — even a profitable one — hits your failure threshold through an unlucky sequence before the edge can play out. It depends on three levers: your edge (win rate × payoff), your risk per trade, and how much drawdown you define as ruin.
The key insight: halving risk per trade squares the survival odds, because it doubles the number of losing units needed to reach ruin. A strategy with a modest edge and 1% risk can have near-zero ruin probability, while the same strategy at 5% risk courts disaster.
This is the classic simplified model (fixed fractional risk, independent trades). Real markets have streaks and changing volatility — treat the output as a comparative guide, not a guarantee.
Stop calculating trade-by-trade. TradeDiary imports your trades from Zerodha, Groww, Upstox, Dhan & more, and tracks these numbers across your whole history.
Start Free — No Credit Card →Serious traders aim for under 1% — ideally a number indistinguishable from zero. If this calculator shows more than 5%, reduce risk per trade: it's the only input you control completely.
Without positive expectancy, every trade drains the account on average; time only makes it worse. Position sizing can slow ruin but not prevent it. Fix the edge first — the journal shows where it leaks.
It's a common choice because a 50% drawdown needs a 100% gain to recover, and most traders quit long before that. Set it to whatever loss would genuinely end your trading — for many, 25–30% is more honest.