Risk of Ruin Calculator - Blackswan Fx

Risk Of Ruin Calculator

The risk of ruin calculator is a sophisticated tool for calculating the probability of loss in a trading strategy.

 

How to calculate risk of ruin?

Enter the metrics for the system:

Win rate (%) – the percentage of trades that result in profit.

Average profit/loss – This is the Risk to Reward (Example: 1.5 RR meaning for every $1 risked you get $1.5 back) You can divide the Average profit by the average loss to find the true number.

Risk per Trade (%) – the percentage of risk taken in each trade.

Number of trades – the number of trades that will be tested by the calculation. The greater the number of trades, the greater the risk of loss and ruin.

 

Ask

What’s the difference between risk of ruin and risk of drawdown?

What’s the difference between the danger of becoming bankrupt and the risk of having your balance go negative?

A probability of a certain loss from the initial balance is what is meant by the term “risk of ruin.” For example, if you began with $1000, calculating a risk of ruin of 40% would tell you the likelihood that you would lose 40% of your balance, which is equivalent to losing $400. When there is more money in the equity, there is less chance of ruin.

Due to the fact that the peak of your account is constantly raised as the equity develops, the risk of drawdown remains constant during the duration of your account (drawdown is the calculation of highest peak-to-valley decrease).

 

Need more help?

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