Risk of Ruin & Drawdown Recovery Calculator
Two numbers every trader should know: how likely a losing streak wipes you out, and how much gain it takes to claw back a loss. The math is brutal — this tool makes it visible before the market does.
How the Math Works
Losing streak probability: the chance of N consecutive losses is (1 − winRate)^N. At a 50% win rate, a 10-loss streak is a 1-in-1,024 event — inevitable across thousands of trades.
Risk of ruin estimate: approximated with the standard Kaufman-style model for fixed-fractional betting — if your risk % exceeds the optimal fraction (Kelly), ruin probability climbs toward 100% regardless of edge.
Drawdown recovery: losing 50% requires +100% to return. The required gain is 1/(1 − DD%) − 1 — asymmetric loss math no trader can escape.
FAQ
What is a good risk of ruin for a trading strategy?
Professionals target a ruin probability below 1% over the strategy's expected trade count. At 1% risk per trade with a 50% win rate and 2R payoff, ruin is negligible; at 10% risk it becomes a near-certainty over time.
How many losing trades in a row can I expect?
With a 50% win rate you will see 5 losses in a row every ~32 trades and 10 in a row every ~1,000 trades. The calculator computes streak probabilities for any win rate and risk level.
How much profit is needed to recover from a 30% drawdown?
42.9%. Recovery is 1/(1-0.30)-1. The deeper the hole, the steeper the climb: 50% down needs +100%, 70% down needs +233%.
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Use pip value, lot size, spread and drawdown math as hard inputs in your EA or prop-firm rule set.
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