Glossary › risk of ruin
Trading glossary · risk
risk of ruin
The chance of losing so much money that you cannot keep trading.
The fuller meaning
The probability of losing so much that you cannot carry on. In the app's simulation of a method winning 45% of trades at 2R, risking 1% or 2% per trade almost never halved the account within 200 trades, 10% did so about 16% of the time and 20% about half the time.
risk of ruin.
Related words
1% rule · ATR stop · average loss · average win · breakeven · breakeven win rate · correlation · daily loss limit · drawdown · equity curve