Free tool
Risk of ruin calculator.
A strategy with a real edge can still hit its drawdown limit if each trade is sized too large. Put in your win rate, payoff and risk per trade, and see how often the limit comes before the target.
Your strategy and your limits
Losses at 1R. Set the target to 0 for a plain drawdown limit.
How often the limit comes first
Both measured from the starting balance, on closed trades.
Reference
Same edge, different size. A 45% win rate with 2R winners, a +10% target and a 10% limit, over at most 300 trades.
| Risk per trade | Target first | Limit first | Neither |
|---|---|---|---|
| 0.25% | 99.7% | under 0.1% | 0.3% |
| 0.5% | over 99.9% | under 0.1% | under 0.1% |
| 1% | 97.5% | 2.5% | under 0.1% |
| 1.5% | 91.3% | 8.7% | under 0.1% |
| 2% | 87.0% | 13.0% | under 0.1% |
| 3% | 78.5% | 21.5% | under 0.1% |
The method
How the numbers are computed.
Each trade risks a fixed percentage of the current balance: a win multiplies it by one plus risk × average win, a loss by one minus risk. Because the balance then depends only on how many wins and losses there have been, not their order, the calculator can follow the exact probability of every path, trade by trade, and stop each one the first time it touches the limit or the target.
What it leaves out matters. Your win rate is an estimate, so try the calculator a few points lower, or check how loose it is with the sample size calculator. It ignores daily loss limits and open positions, both of which end real prop firm attempts; backtesting the challenge itselfcatches those. And losing streaks are longer than they feel: see the losing streak calculator.
FAQ
Frequently asked questions.
The probability that an account falls to a set level of loss before it recovers, given a win rate, a payoff and a size per trade. The level is yours to choose: 100% for a blown account, 50% for a drawdown you would stop trading at, or a prop firm's maximum loss, for example 10% of the starting balance.
Exactly, not by simulation. With a fixed percentage of the balance risked on each trade, the balance after a given number of wins and losses is the same whatever their order, so the calculator tracks the probability of every win count, trade by trade, and stops a path the first time it touches the limit or the target. The result matches a 200,000 path simulation to the third decimal.
More than anything else you control. At a 45% win rate with 2R winners, a 10% limit and a 10% target over 300 trades, risking 0.5% a trade hits the limit first in under 0.1% of cases and 1% in about 2.5%, while 2% does so in about 13%. The edge is the same; only the size changed.
The model is generous in four ways. It treats your win rate as the true one, when a backtest only estimates it. It assumes trades are independent and every win and loss is the same size. It measures closed trades, while prop firms usually measure equity with open positions included. And it ignores daily loss limits, which can end an attempt on one bad day. Treat the result as a floor.
Test it on your own trades, under the real rules. On paid plans, BacktestFlow's challenge mode replays history against a profit target and daily and maximum drawdown limits measured on equity, open positions included, and Monte Carlo resamples your own R multiples into 1,000 equity paths.
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