Your edge is not the same thing as your outcome. Enter a win rate, a reward-to-risk and a position size, and watch ten thousand identical accounts take ten thousand different paths — some to the target, some straight through the drawdown floor.
It takes the three numbers that describe a trading edge — win rate, reward-to-risk, and risk per trade — and runs your account through ten thousand alternative futures. Same edge every time. The only thing that changes is the order the wins and losses arrive in.
That ordering is the part beginners never account for, and it is the part that decides whether an account survives.
Two traders can have identical edges and completely different outcomes, because a 60% win rate does not mean six wins then four losses. It means that over a long enough run, six in ten are winners — and it is entirely ordinary for four or five losses to arrive back to back.
Set the simulator to a 60% win rate at 1R and watch the sample paths. Some finish well up. Some spend the first thirty trades underwater. A few breach a 10% drawdown limit and never get the chance to recover — and they had exactly the same edge as the ones that did well.
This is the whole lesson. A positive edge does not guarantee a positive outcome over a small number of trades. It guarantees a positive average over a large number of them, provided you are still trading when the large number arrives. Risk per trade is what decides whether you are.
Two formulas do all the work. The first is expectancy — what one trade is worth on average, measured in units of the amount you risk:
Positive expectancy is necessary and nowhere near sufficient. The second piece is what variance does to it. Rather than approximating that with a formula, the tool simulates it directly:
Leave the win rate at 45% and the reward at 2R. That is a genuinely profitable edge: expectancy is +0.35R per trade, so a hundred trades should return about 35R.
Now change only the risk per trade. Set it to 1% and note the failure rate. Then 2%. Then 5%. Then 10%.
The edge never changes. The expectancy never changes. But the share of accounts that hit the drawdown wall climbs steeply, and past a certain point the median outcome starts falling even though the average trade is still profitable — because a deep enough drawdown leaves you compounding upward from a much smaller base.
This is the single most important thing an intermediate trader can internalise, and it takes about ninety seconds to see for yourself: position size does not just scale your returns, past a point it destroys them.
Most traders guess their win rate, and most guess high. The simulator cannot fix that — garbage in, confident-looking garbage out. Get the real figure by replaying your setup bar by bar in the free backtester, log fifty or a hundred trades, then come back and put your actual numbers in here.
Measure your real win rate free →Most funded-account programmes work the same way: hit a profit target, never breach a maximum drawdown. That maps directly onto this simulator — the drawdown limit is the rule that ends the account, and the number of trades is how long you have.
Run the prop preset and look at the failure rate. Then notice what happens when you raise risk per trade from 1% to 3% in an attempt to reach the target faster. The pass rate does not improve; the failure rate roughly triples. The fast route to the target is also the fast route to the wall, and it is the same route.
The practical conclusion the simulation supports every time: in a challenge with a hard drawdown limit, reducing risk per trade improves your odds more reliably than improving your win rate does. Win rate is hard to change. Risk per trade is a number you type into a box.
Everything above starts with a win rate you have measured rather than hoped for. If you do not have one yet, that is the thing to go and get — and the Stop Loss Reality Checker is a good next stop, because stop distance is the input that quietly determines the win rate you end up with.
What is risk of ruin?
It is the probability that an account hits a level it cannot come back from — a prop firm's maximum drawdown, or simply a loss so deep that recovery is impractical — before the edge has time to play out. It depends on three things: your expectancy, your position size, and how many trades you take. Position size is usually the dominant one, and it is the only one you control instantly.
I have a winning strategy. Why are accounts still failing?
Because a positive expectancy is a statement about the long run, and the drawdown limit acts in the short run. With a 45% win rate you should expect to face runs of five and six consecutive losses; nine accounts in ten will see the streak reported under the chart. If your position size means that streak breaches the limit, the edge never gets to matter.
How much should I risk per trade?
Rather than take a rule of thumb, sweep the input. Keep your measured win rate and reward fixed, then raise risk per trade from 0.5% upward and watch the failure rate. Pick the largest value whose failure rate you would genuinely accept. For most people with a hard drawdown limit that lands somewhere between 0.5% and 1.5%, but the honest answer depends on your own numbers.
Is a high win rate better than a high reward-to-risk?
Neither wins on principle — expectancy is what counts, and 60% at 1R and 35% at 3R produce almost the same expectancy. What differs is the experience. The low win rate version has far longer losing streaks and needs more emotional tolerance and a longer runway. Run both and choose the one you could actually sit through.
Why do the results change slightly each time?
Because each run deals fresh random trades. Ten thousand accounts is enough that the headline percentages move only a little between runs. If you see a figure swing dramatically, it usually means the number of trades is small enough that variance dominates — which is itself worth knowing.
Where do I get a real win rate to put in?
From a backtest, not from memory. Replay your setup bar by bar in the free backtester, take fifty to a hundred trades with the same rules, and record the results. That measured win rate and reward-to-risk are the only inputs that make this simulator meaningful — with guessed numbers it produces a very convincing picture of a strategy that does not exist.
Win rate and reward-to-risk are measurements, not estimates. Replay your setup on gold, GBPUSD or the Dow, log a hundred trades with consistent rules, then come back and simulate the account that edge would really produce.
Open the free backtester →One reproducible testing idea, with its rules, limitations, and review questions made explicit. In your inbox every week.
Beginner exploration
Open each answer for a plain-language way to read Risk of Ruin Simulator, test it carefully and decide what to explore next.
This page focuses on “Risk of Ruin Simulator”.Enter your win rate, reward-to-risk and risk per trade. Ten thousand simulated accounts show how many blow the drawdown limit, the typical worst losing streak, and the median outcome. Free, no sign-in.For “Risk of Ruin Simulator”, a beginner should identify what the interactive tool measures, assumes or teaches before acting on its conclusion.Treat this page's account of “Risk of Ruin Simulator” as a learning reference rather than a prediction, signal or promise of future performance.
For “Risk of Ruin Simulator”, run a baseline with inputs you can verify before experimenting with optimistic or extreme values.While exploring “Risk of Ruin Simulator”, change one input at a time so you can see which assumption moved the result.Keep your “Risk of Ruin Simulator” record honest: save the inputs beside the output because a number without its settings cannot be reproduced.Before leaving “Risk of Ruin Simulator”, treat the result as a scenario to investigate, not as an instruction to place a trade.
Turn one idea from “Risk of Ruin Simulator” into a rule with explicit inputs, dates, costs and pass-or-fail conditions.Ask AI to expose missing assumptions in that “Risk of Ruin Simulator” test, not to guess the next market move.Use the FXAbsolute AI Backtesting Lab to inspect calculations connected to “Risk of Ruin Simulator” and the assumptions behind them.Reproduce any important “Risk of Ruin Simulator” result and reserve unseen data before deciding that an apparent pattern is useful.
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