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Traders
Risk of Ruin
Approximation for fixed risk fraction
Runs locally in your browser
Parameters
Results
- Risk of ruin
- 0%
- Edge
- 0.2
- Interpretation
- Low
Simplified model; simulation needed for accuracy.
How it works
Estimate approximate risk of ruin given edge, risk per trade, and capital in R-multiples.
Who it's for: Traders assessing blow-up risk with fixed fractional position sizing.
Uses a simplified formula based on edge (E/risk) and risk percentage per trade.
Capital in R = number of risk units in the account.
Negative edge implies certain ruin over time.
How to use
- Enter Edge (E/risk), Risk per trade (%), and Capital (R).
- Read Risk of ruin and Interpretation (Low / Moderate / High).
Good to know
- For precise results, run Monte Carlo simulation with your actual trade distribution.