Risk of ruin: have you calculated yours?

FTC Community TeamStaff104 views

Risk of ruin is the probability your account blows up given your edge, win rate and risk per trade. Almost nobody calculates it, and the number is usually scarier than the trader expects.

Risk of ruin: have you calculated yours? — risk-reward diagram
A risk-reward ratio of 1 to 2

Have you?

  • the inputs you used and the result
  • how the number changed your sizing
  • the surprise it delivered
Risk of ruin: have you calculated yours? — drawdown and recovery diagram
An equity curve during a drawdown and its recovery

The drawdown guide provides the maths for the calculation.

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