Calculate your probability of account ruin at 30, 90, and 365 days based on risk per trade and win rate. A sobering look at the math behind position sizing and survival.
Monte Carlo simulation — 3,000 scenarios, three ruin levels
HOW IT WORKS
Your three core parameters: starting capital, how much you risk per trade, and your win rate.
How many trades you take per day determines how quickly the probability compounds.
See how likely account blow-up is at different timeframes, plus a comparison of different risk levels.
FAQ
Risk of ruin is the probability that a trader will lose their entire trading capital before achieving their profit goals. It depends on: win rate, average win/loss ratio, and position size. The most powerful lever is position size — cutting risk per trade from 5% to 1% dramatically reduces ruin probability.
Yes, absolutely. Even with a 50% win rate, if you risk 5-10% per trade, a bad streak of 10-15 consecutive losses (statistically likely over hundreds of trades) can reduce your account to near zero. The math is brutal: 10 consecutive 10% losses = 65% of capital gone.
At 1% risk per trade, even with a 40% win rate, the mathematical risk of ruin over 1 year is very low for most strategies. At 2%, it remains manageable. At 5%+, ruin probability becomes significant within 3-6 months for strategies without a strong edge. Professional traders typically risk 0.5-2%.
Practically, a blown account means losing enough capital that you can no longer meaningfully trade your strategy (e.g., margin calls, or reducing to a size where single trades cannot follow lot size minimums). Mathematically, models define it as losing 50% or more of starting capital.
Three ways (in order of impact): (1) Reduce risk per trade — from 5% to 1% can reduce ruin probability by 80-90%. (2) Improve win rate — through better setup selection and journaling. (3) Improve R:R — ensure your wins are larger than your losses on average. All three compound multiplicatively.
Track your actual risk per trade
TradeLyser shows your real average risk per trade from actual trades — not what you planned, but what you actually did — so you can close the gap before it closes your account.