Every risk-of-ruin resource online is a calculator. This is the table. Below is the probability of a 50% account drawdown for 20 strategy profiles across 6 position sizes — 20,000 simulated runs per cell, 2,400,000 runs in total. Screenshot it, print it, pin it above the desk.
Key takeaways
- A break-even strategy (50% win rate at 1:1) has a 0.24% chance of a 50% drawdown at 1% risk — and 94.08% at 10% risk. Same edge, different bet size.
- A genuinely profitable strategy (40% at 1:2, +0.20R per trade) still carries a 46.2% chance of a 50% drawdown at 10% risk per trade.
- No position size rescues a negative edge: at 1:1 and a 30% win rate, ruin is near-certain at every size tested.
- Risk per trade moves the answer more than win rate or risk-to-reward. It is the lever you fully control.
The risk of ruin table
Read a row as one strategy profile, and the six right-hand columns as what happens to that same strategy at different bet sizes.
| Risk : reward | Win rate | Edge per trade |
Risk per trade | |||||
|---|---|---|---|---|---|---|---|---|
| 0.5% | 1% | 2% | 3% | 5% | 10% | |||
| 1 : 1 | 30% | -0.40R | 99.88 | 100 | 100 | 100 | 100 | 100 |
| 1 : 1 | 40% | -0.20R | 4.81 | 94.96 | 99.96 | 100 | 100 | 100 |
| 1 : 1 | 50% | 0.00R | <0.01 | 0.24 | 16 | 39.98 | 70.47 | 94.08 |
| 1 : 1 | 60% | +0.20R | <0.01 | <0.01 | 0.01 | 0.03 | 0.64 | 10.15 |
| 1 : 1 | 70% | +0.40R | <0.01 | <0.01 | <0.01 | <0.01 | <0.01 | 0.4 |
| 1 : 1.5 | 30% | -0.25R | 35.23 | 99.25 | 99.98 | 100 | 100 | 100 |
| 1 : 1.5 | 40% | 0.00R | <0.01 | 1.4 | 27.12 | 52.85 | 79.06 | 96.98 |
| 1 : 1.5 | 50% | +0.25R | <0.01 | <0.01 | <0.01 | 0.08 | 1.74 | 17.86 |
| 1 : 1.5 | 60% | +0.50R | <0.01 | <0.01 | <0.01 | <0.01 | 0.01 | 1.54 |
| 1 : 1.5 | 70% | +0.75R | <0.01 | <0.01 | <0.01 | <0.01 | <0.01 | 0.12 |
| 1 : 2 | 30% | -0.10R | 0.26 | 39.59 | 87.39 | 95.88 | 99.33 | 99.97 |
| 1 : 2 | 40% | +0.20R | <0.01 | <0.01 | 0.22 | 1.8 | 11.62 | 46.2 |
| 1 : 2 | 50% | +0.50R | <0.01 | <0.01 | <0.01 | 0.02 | 0.21 | 5.4 |
| 1 : 2 | 60% | +0.80R | <0.01 | <0.01 | <0.01 | <0.01 | <0.01 | 0.5 |
| 1 : 2 | 70% | +1.10R | <0.01 | <0.01 | <0.01 | <0.01 | <0.01 | 0.07 |
| 1 : 3 | 30% | +0.20R | <0.01 | 0.03 | 1.87 | 8.71 | 29.75 | 70.92 |
| 1 : 3 | 40% | +0.60R | <0.01 | <0.01 | <0.01 | 0.03 | 0.78 | 11.27 |
| 1 : 3 | 50% | +1.00R | <0.01 | <0.01 | <0.01 | 0.01 | 0.03 | 1.75 |
| 1 : 3 | 60% | +1.40R | <0.01 | <0.01 | <0.01 | <0.01 | <0.01 | 0.24 |
| 1 : 3 | 70% | +1.80R | <0.01 | <0.01 | <0.01 | <0.01 | <0.01 | 0.01 |
The three things this table shows
1. Bet size dominates. Follow any single row left to right. The strategy never changes — same win rate, same risk-to-reward, same edge — yet the ruin probability climbs from near zero to near certain. Nothing else in trading has that leverage over your survival.
2. A positive edge is not protection. The 40% / 1:2 row earns +0.20R per trade, which is a respectable edge. Risked at 10% per trade it still fails 46.2% of the time. Traders who blow up are not always wrong about the market; they are frequently wrong about the size.
3. Break-even is not neutral. The 50% / 1:1 row has an edge of exactly zero, yet ruin still rises steeply with size. Losses compound against a shrinking balance, so a coin flip repeated at a large enough stake is a losing proposition. This is the mathematical core of the 1% risk rule.
Important: this table assumes independent trades and a constant win rate. Real strategies cluster their losses — correlated positions, regime changes and news events all bunch losing trades together — so treat these figures as a floor on your true risk, not a ceiling.
Methodology
- Method: Monte Carlo simulation, 20,000 independent runs per cell, 500 trades per run.
- Sizing: fixed-fractional on current equity — each trade risks the stated percentage of the balance at that moment, matching how the FxBacktest simulator's automatic lot sizing works.
- Ruin definition: 50% drawdown from starting balance. A run is counted as ruined the first time equity touches that level.
- Edge column: expectancy in R per trade, calculated as (win rate × reward) − (loss rate × 1).
- Assumptions: independent trades, constant win rate, no spread, commission, slippage or partial fills. Reality is worse on every count.
- Reproducibility: fixed random seed, so the same table regenerates identically.
- Updated: July 2026.
Finding your own numbers
The table is generic by design. To place yourself in it you need your own win rate and risk-to-reward from a real sample — see expectancy and how many trades to backtest for what counts as enough data. Then run your specific numbers through the Monte Carlo simulator, which does exactly this simulation with your inputs, and check the result against the losing streak you should expect.
Risk of ruin FAQ
What is risk of ruin?
Risk of ruin is the probability that a run of losses reduces your account below a level you can trade from. It is driven by three inputs — win rate, risk-to-reward, and risk per trade — and the last one dominates. This table defines ruin as a 50% drawdown from the starting balance within 500 trades.
How much should I risk per trade?
The table shows why 1–2% is the conventional answer. A strategy winning 50% of trades at 1:2 risk-to-reward has a 0% chance of a 50% drawdown when risking 1% per trade, 0% at 2%, and 5.4% at 10%. The edge is identical in all three cases — only the bet size changes.
Can a profitable strategy still blow up?
Yes, and the table quantifies it. A strategy winning 40% at 1:2 has a genuinely positive edge of +0.20R per trade, yet risking 5% per trade still carries a 11.62% chance of a 50% drawdown, rising to 46.2% at 10% risk. Positive expectancy only pays if your sizing keeps you in the game long enough to collect it.
What happens with a break-even strategy?
A 50% win rate at 1:1 has exactly zero edge — and ruin still climbs steeply with size: 0.24% at 1% risk, 16% at 2%, 70.47% at 5%, 94.08% at 10%. Because losses compound against a shrinking balance, a coin-flip strategy is not neutral. Size alone will eventually ruin it.
How was this table calculated?
By Monte Carlo simulation: 20,000 independent runs of 500 trades for every cell, using fixed-fractional on current equity — the same way the FxBacktest simulator's automatic lot sizing behaves. A run counts as ruined the first time equity falls 50% below its starting value. It assumes independent trades and a constant win rate.
What is an acceptable risk of ruin?
Most professionals want the probability of a catastrophic drawdown well under 1% over a long run of trades, which in this table means risking 1% or less with a positive edge. There is no universally correct threshold, but ruin is the one outcome you cannot recover from, so survival outranks return optimisation.
Cite or republish this data
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