Want to minimize your chances of losing your entire trading capital? The Risk of Ruin Calculator is a must-have tool for traders looking to measure the likelihood of ruin based on their strategy's win rate and risk parameters.
Whether you're a seasoned pro or just starting, this tool gives you crucial insights to help refine your approach and manage risk like never before. Check out the video below to learn how to use it.
Step-by-Step Guide on Using the Risk of Ruin Calculator:
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Access the Tool: Head over to Forex Risk of Ruin Calculator.
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Input Starting Capital: Enter the amount of capital you are starting with. This could be your entire trading balance or just a portion dedicated to a specific strategy.
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Enter Risk per Trade: Fill in the percentage of your capital you're willing to risk on each trade. For example, if you risk 2% of your balance on every trade, enter “2”.
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Win Probability: Estimate your probability of winning a trade. This could be based on historical performance or expected outcomes (e.g., if you win 60% of your trades, input "60").
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Average Reward/Risk Ratio: Input your reward/risk ratio. If you usually aim for a $3 profit for every $1 you risk, your ratio is 3:1, so input "3".
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Click "Calculate": Once all fields are complete, hit the "Calculate" button to see your risk of ruin results.
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Analyze Results: The tool will present the probability that you could lose all your trading capital based on your inputs. Adjusting any variable, such as the risk per trade or win rate, will show how it impacts your risk.
This tool is perfect for fine-tuning your strategy and ensuring you're managing risk efficiently!
Ready to learn more about trading? Check out our Beginner's Guide to Forex Trading and start your journey to becoming a successful trader!