What is risk of ruin?
Risk of ruin is the statistical probability that a string of losses drains your account (or breaches a drawdown limit) before your edge plays out. Two traders with the same strategy can have wildly different survival odds depending purely on how much they risk per trade.
What moves the number
- Risk per trade — the biggest lever; halving it slashes ruin probability.
- Win rate and risk-reward — a real edge lowers long-run ruin.
The takeaway is always the same: small, consistent risk survives; oversized risk eventually does not.