Tool
Risk of Ruin Simulator
See if your strategy actually survives the variance, before you risk real money.
Why most traders blow up
A strategy with positive edge can still ruin you if your position sizing is too aggressive for the size of your sample. Most traders quit somewhere between a 30% and a 50% drawdown, and they think it's because their system stopped working. Usually their system was fine. Variance got them.
This tool simulates your strategy thousands of times and shows the full distribution of outcomes: median, worst-case, best-case, probability of hitting a drawdown that would make you quit. Real edges plus realistic variance, not the linear story your spreadsheet tells.
Step 1 · Your strategy
The three numbers that define an edge. Be honest. Most beginners overestimate their win rate by 5-10 points.
Starting account (USD)
What you trade with today.
Win rate · 50%
How often your trades close in profit. 50% is the honest default for most discretionary traders. Quants with real edge land 53-60%.
Reward to risk · 1 : 2.0
Average dollar win divided by average dollar loss. 1:2 is the pro minimum. Higher is rarer than people claim.
Risk per trade · 2.0%
What % of CURRENT equity you risk each trade. Pros stay at 1-2%. Anything above 5% is almost always too aggressive for the long run.
Step 2 · How long to simulate
More trades = bigger variance window, more chances for a streak of bad luck to catch up. Pick a horizon that matches how long you plan to trade.
Number of trades per simulation
The full sample size each run covers.
Number of simulations · 500
How many runs to average over. More = smoother distribution but slower to recompute when you change inputs.
What counts as ruin?
The drawdown depth at which a simulation is marked as ruined. Most traders psychologically quit at 30-50% drawdown.
How the math works
Each simulation walks 200 trades. On each one, a random number decides win or loss using your win rate. Wins gain reward × current-equity × risk%. Losses subtract risk% of current equity. The simulator tracks your peak equity and your max drawdown from that peak.
Across 500 independent runs, we count how often the drawdown ever crossed the threshold you chose. That fraction is your ruin probability. It says nothing about whether your edge is real, only how survivable your sizing is at the variance your edge is actually exposed to.