500 random runs of the same rules. This is a model of arithmetic, not a forecast: real markets have costs, slippage and streaks the model ignores.
The fields are pre-filled with neutral sample values. Change them and the results next to the inputs update. Every figure you see comes from the simulation, not from this text.
What this trading simulator does
The tool runs a Monte Carlo simulation. It generates a large number of random trade series that all follow your rules, then summarises how they ended.
- Win rate is the share of trades that close in profit.
- Risk-reward (R:R) is the size of an average win compared with the size of an average loss. A loss costs "R", and a win pays R multiplied by your ratio.
- Risk per trade is the share of the current balance you lose when a trade hits its stop-loss.
- Number of trades is the length of each series.
- Loss limit is the drawdown level you treat as "ruin". It does not have to mean a zero balance. It can be the point where you would stop trading the strategy.
Each trade is drawn at random. It is a win with the probability you set and a loss otherwise. The series ignore spreads, commissions, swaps, slippage and gaps unless you lower the inputs yourself to allow for them.
How to read the results
- Distribution of final balances. This is the range of where the series ended, from the worst to the best, with the median in between. A wide range means luck has a large effect over this number of trades.
- Maximum drawdown. This is the deepest fall from a peak balance in each series. The tool shows the typical value and the bad cases.
- Probability of hitting the loss limit. This is the risk of ruin as this model defines it: the share of simulated series that reached your loss limit at some point.
- Losing streaks. This is the longest run of consecutive losses that appeared. Long streaks occur even when the win rate is high.
Two strategies can have the same average result and very different drawdowns. Risk per trade usually changes the drawdown figures much more than it changes the median.
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Formula used
Risk is a fixed share of the current balance, so position size shrinks after losses and grows after wins.
| Event | New balance |
|---|---|
| Win | balance + balance × r × RR |
| Loss | balance − balance × r |
Here r is the risk per trade as a fraction and RR is the reward-to-risk ratio.
Drawdown at any point is calculated as:
drawdown = (peak balance − current balance) ÷ peak balance
Risk of ruin is calculated as:
risk of ruin = series that reached the loss limit ÷ all simulated series
The break-even win rate gives you a reference point. Below it, the strategy loses on average:
break-even win rate = loss size ÷ (loss size + win size)
You can check that figure on its own with the break-even win rate calculator.
Limits of the model
This is a model, not a forecast. Real trading differs from it in several ways:
- Your real win rate and R:R are estimates. A small sample of past trades can be far from your long-run figures.
- Real trades are not independent. Losses often cluster when market conditions change.
- Costs, slippage and gaps reduce real results. A stop-loss does not guarantee the exit price.
- Leverage multiplies both gains and losses. Leveraged forex and CFD trading can lose money fast, including the whole deposit.
Use the output to understand the range of outcomes, not to predict your next trades. Rerunning the same inputs gives slightly different numbers each time, because the series are random.
Related tools and reading
- Convert a chosen risk per trade into a position size with the lot size calculator.
- See how much gain is needed to recover from a drawdown with the drawdown recovery calculator.
- Compare target and stop distances with the risk-reward calculator.
- Read about position sizing and loss limits in risk management, and about reacting to losing streaks in trading psychology.
- To test a strategy without real money, you can use a demo account or our practice simulator.
Frequent questions
What is risk of ruin?
It is the probability that a series of trades reaches a loss level you define as unacceptable. This risk of ruin calculator estimates it as the share of simulated series that touched your loss limit.
Why do the results change when I run it again?
Each run draws new random trades. The main figures should stay close between runs. Larger differences suggest the outcome depends heavily on luck over that number of trades.
Does a positive expectancy mean I cannot be ruined?
No. A strategy that wins on average can still hit a deep drawdown, especially with high risk per trade. The simulator shows how often that happens in the model.
Why does risk per trade matter so much?
Each loss removes a share of the balance, and losses compound. Higher risk per trade widens the spread of outcomes and raises the chance of reaching the loss limit.
Can I use my own trading history as input?
Yes. Enter your measured win rate and average R:R. Keep in mind that a short history gives uncertain estimates, so try slightly worse values too.
Is this a trading signal or advice?
No. It is an educational model of a fixed-risk strategy. It says nothing about any market or instrument and does not promise any result.