Bharath Shiksha

Free Tool

Risk of Ruin Calculator

The probability your account goes to zero, given your win rate, reward-to-risk ratio, and risk per trade. Sixty seconds of math. Years of consequence. The formula is gambler's ruin, standardised by quant desks for position sizing.

Percentage of trades that close above breakeven. Most retail systems land between 35 and 60.
Average winner divided by average loser. A 2.0 means winners are twice the size of losers.
Total capital in this trading account.
Maximum amount lost if the trade hits its stop. 1% of account is the professional default.

 

 

 

Same system, different sizing

Risk of ruin is exponential in risk-per-trade, not linear. The table below holds your win rate and reward-to-risk constant and varies only the risk per trade.

Risk per trade Loss units of tolerance (C) Probability of ruin

How to read this number

 

The formula assumes a known edge, independent trades, and constant position sizing. Real trading violates all three assumptions. Actual risk of ruin runs two to five times higher than the formula predicts once estimation error, regime shifts, and behavioural drift are included. Treat the number here as a best-case estimate, not a ceiling.

Get the full risk-of-ruin report

An email-delivered PDF breaking down the math, three worked Indian retail examples, the three hidden variables this formula does not capture, and the sizing rule professional desks run by default. No cost. No onward sharing.

Bharath Shiksha does not spam. The report arrives once; nothing else is sent unless you enrol. Unsubscribe instructions in the footer of every email the Academy ever sends.

Sent. The report will arrive at your inbox in the next few minutes. Check the spam folder if it does not appear by then.
Formula: ROR = ((1 − A) / (1 + A))C where A = (W·R − L) / (W·R + L), with W = win rate (0 to 1), L = 1 − W, R = reward:risk, and C = risk-per-trade units of loss tolerance (account ÷ risk-per-trade).

Source: gambler's ruin theory, adapted for binary-outcome trading systems. Full derivation and three worked examples in the Bharath Shiksha essay at Risk of Ruin Calculator — The Math Every Indian Retail Trader Should Run Once.