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Forex Account Management: Protect Your Money from Scams
This January, safeguard your money with smart Forex account management strategies. Avoid common scams and stay informed for better trading.
Risk of ruin calculator
The chance a strategy falls to a drawdown you could not accept, at a given risk per trade, worked out from thousands of simulated runs.
Result
Risk of ruin
7.6%
Chance of falling 50% below the start at some point in 500 trades.
- Expectancy
- +0.050R a trade
- Runs that end below the start
- 25.1%
- Median deepest drawdown
- 38.9%
- Ending balance, worst 5%
- 0.58× start
- Ending balance, median
- 1.42× start
- Ending balance, best 5%
- 3.47× start
From 8,000 simulated runs with a fixed seed, so the same inputs always give the same answer. Wins and losses are fixed sizes and trades are independent; real results vary more.
This tool uses no exchange rates. Everything is calculated in your browser; nothing you enter is sent anywhere.
How it is calculated
Even a strategy with a positive expectancy can hit a deep drawdown through an ordinary run of bad luck. How likely that is depends heavily on how much is risked per trade.
each trade: balance × (1 + risk × R) on a win, × (1 − risk) on a lossruin = the balance falls to the chosen drawdown below the startrisk of ruin = ruined runs ÷ all runs
The calculator plays out 8,000 runs of trades at random with the win rate given, each trade risking a share of the balance at the time. The seed is fixed, so the same inputs always give the same answer. Try halving the risk per trade: the risk of ruin usually falls much more than half.
Worked example
- 42% winners at 1.5R: expectancy is 0.42 × 1.5 − 0.58 = +0.05R a trade.
- That is a thin edge. At 2% a trade, a 50% drawdown is a real possibility over a few hundred trades.
Risk. These tools do arithmetic on the figures you enter. They are not advice, and unless a field asks for them they leave out spreads, commission, financing and slippage. Past results do not predict future ones. Trading leveraged currency products carries a high risk of loss. Read our financial disclaimer.