Advanced Forex Risk of Ruin Calculator
Accurately assess your trading strategy’s risk profile with Monte Carlo simulation
Risk of Ruin is the probability of losing a predetermined percentage of your trading capital, making it difficult or impossible to recover. Understanding this concept is crucial for developing a sustainable trading strategy.
Key concepts:
- Win Rate: The percentage of your trades that are profitable.
- Risk-Reward Ratio: The relationship between your average win (R multiple) and average loss.
- Position Sizing: The percentage of capital you risk on each trade.
- Maximum Drawdown: The maximum peak-to-valley decline in your capital.
- Monte Carlo Simulation: This calculator uses this statistical technique to estimate the probability of different outcomes based on random sampling of your trading parameters.
How to use the results: A sustainable trading strategy should have a very low risk of ruin (ideally <1%). If your risk of ruin is high, consider adjusting your position sizing, improving your win rate, or increasing your risk-reward ratio.
Don’t Gamble With Your Trading Account – This Risk Tool Could Save Your Capita
I’ve blown up accounts before. Maybe you have too. That sinking feeling when losses pile up isn’t just bad luck – it’s math you didn’t do beforehand. Let me show you how this calculator fixes that.
What This Tool Really Does (And Why I Won’t Trade Without It)
Most risk calculators give you textbook answers. Ours simulates your actual trading future – the wins, the losses, and worst-case scenarios you’d never imagine.
Think of it like weather forecasting for your trading account:
- Input your actual trading stats (be brutally honest)
- Set your risk tolerance (how much loss keeps you up at night)
- Get a probability score of survival
Real example: My friend Jake thought his 60% win rate was golden. The calculator showed a 38% chance he’d lose half his account within 200 trades. He adjusted his risk per trade from 5% to 2% immediately.
Your Step-By-Step Walkthrough
1. Plug In Your Numbers (Where Most Traders Fudge)
- Win rate: Your actual profitable trade percentage
Confession: I used to round mine up until seeing how it skewed results - Average win/loss: Calculate this properly – track your last 50 trades
2. Set Your Risk Thresholds
Default settings lie to you. Here’s what works:
- Risk per trade: Start with 1% (yes, even if that feels tiny)
- Max drawdown: Set this to where you’d actually stop trading
3. Run Multiple Scenarios
Try these combos to see reality:
- Your current approach
- Half your current risk
- 25% better win rate than you actually have
Pro tip: The “Moderate” preset matches most successful retail traders’ stats
Why This Beats Generic Calculators
We added three features after getting trader feedback:
Monte Carlo Mode
Shows 100 possible equity curves – some will scare you straightThe “Oh Sh Metric**
Calculates your chance of:
- Losing 10% in a week
- Stringing together 8 losing trades
- Recovering from your worst drawdown
- Strategy Stress Test
Reveals if your “high probability” system fails at:
- Low volatility
- High spreads
- Your emotional breaking point
5 Hard-Earned Lessons From Running 10,000 Simulations
The 2% Rule Isn’t Magic
- At 35% win rates, even 2% risk can be suicidal
- At 55%+, you might safely go to 3%
Drawdowns Come In Waves
- Expect 3x your average loss streak
Probability Lies
- That “90% safe” strategy? It fails 1 in 10 times – would you board that plane?
Scalping Is Riskier Than It Looks
- High win rates often mask ruinous tail risks
Rebuilding Takes Longer Than You Think
- Losing 50% requires 100% gain just to break even
Your Burning Questions Answered
Try It Yourself – The Market Won’t Wait
The difference between pros and blown-up accounts? Pros run these numbers religiously.
Click the calculator above now – your future self will thank you when volatility spikes.
For more no-BS trading tools, swing by Trading In Depth – we’re all traders here, not salespeople.