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Risk of Ruin Calculator: Calculate Your Probability of Going Broke | Manage Bankroll Blog
β’ β’ Risk of Ruin Calculator: Calculate Your Probability of Going Broke Use this risk of ruin calculator to determine your probability of losing your entire bankroll. Essential tool for poker players, traders, and sports bettors.
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Risk of Ruin Calculator: Calculate Your Probability of Going Broke
Risk of ruin is the probability of losing your entire bankroll before becoming profitable. It's the most important metric for long-term success in trading, poker, and sports betting.
What is Risk of Ruin?
Risk of ruin (ROR) is a statistical measure that answers the question: "What are the chances I go completely broke before I turn a profit?"
Professional traders and poker players aim for:
Less than 1% risk of ruin (ideal)1-5% acceptable for aggressive playersAbove 5% means your bet sizing is too risky
How to Calculate Risk of Ruin
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Basic Formula ROR = ((1 - Edge) / (1 + Edge)) ^ (Bankroll / Avg Bet)
Edge = Your win rate as a percentage
Bankroll = Your total available funds
Avg Bet = Your typical bet or trade size
Poker Specific Formula ROR = exp(β(2 Γ Win Rate Γ Bankroll) / SDΒ²)
Win Rate = BB per 100 hands
Bankroll = In big blinds
SD = Standard deviation in BB
Trading Formula ROR = ((1 - W) / (1 + W))^N
W = Win rate as decimal
N = Number of trades you can make
Risk of Ruin Examples
Example 1: Sports Betting
$5,000 bankroll
55% win rate (5% edge)
Betting $100 per game (2% of bankroll)
ROR = ((1 - 0.05) / (1 + 0.05)) ^ (5000 / 100)
ROR = (0.905) ^ 50 = 0.005 or 0.5%
Your risk of ruin is 0.5% - excellent!
Example 2: Poker Cash Games
30 buy-in bankroll ($15,000)
5bb/100 win rate
80bb standard deviation
ROR = exp(β(2 Γ 5 Γ 3000) / 6400)
ROR = exp(β4.69) = 0.009 or 0.9%
Your risk of ruin is under 1% - safe.
Example 3: Day Trading
$25,000 account
60% win rate
Average risk $250 per trade
N = 25000 / 250 = 100 trades
ROR = ((1 - 0.60) / (1 + 0.60)) ^ 100
ROR = (0.25) ^ 100 β 0%
With 60% win rate and 1% risk per trade, your ROR is essentially zero.
Factors That Affect Risk of Ruin
1. Win Rate Higher win rate = Lower risk of ruin
50% win rate (no edge): Very high ROR
52% win rate: Moderate ROR
55% win rate: Low ROR
60% win rate: Very low ROR
2. Bankroll Size Larger bankroll = Lower risk of ruin
Poker bankroll recommendations:
Aggressive: 20-30 buy-ins (5-10% ROR)
Standard: 30-50 buy-ins (1-5% ROR)
Conservative: 50-100 buy-ins (<1% ROR)
3. Bet Sizing Smaller bets = Lower risk of ruin
Betting 5% per trade: High ROR
Betting 2% per trade: Moderate ROR
Betting 1% per trade: Low ROR
4. Variance Higher variance = Higher risk of ruin
Tournaments: Extremely high variance (need 100+ buy-ins)
Cash games: Moderate variance (need 30-50 buy-ins)
Sports betting: Lower variance (need 50-100 units)
Risk of Ruin by Activity
Poker Cash Games Recommended buy-ins for target ROR:
1% ROR : 50+ buy-ins5% ROR : 30 buy-ins10% ROR : 20 buy-ins Live cash games have lower variance, so you can get away with 20-30 buy-ins. Online cash games need 50+ buy-ins due to higher variance.
Poker Tournaments Tournaments have extreme variance:
Conservative : 100+ buy-ins (<1% ROR)Standard : 50-75 buy-ins (5-10% ROR)Aggressive : 30-50 buy-ins (10-20% ROR)
Sports Betting Based on unit size (1 unit = 1% of bankroll):
1 unit bets : 100+ units (<1% ROR)2 unit bets : 50+ units (1-5% ROR)3+ unit bets : 30+ units (5-10% ROR)
Day Trading
0.5% risk : Very low ROR1% risk : Low ROR2% risk : Moderate ROR5% risk : High ROR Most professional traders risk 0.5-1% per trade.
Common Risk of Ruin Mistakes
1. Overestimating Your Edge Most people think their win rate is higher than it actually is. This leads to:
Betting too much
Keeping too small a bankroll
Underestimating true ROR
Solution : Track 100+ bets/trades before trusting your statistics.
2. Ignoring Variance Even with an edge, you can lose 10, 20, or 30 bets in a row. Many people:
Don't account for worst-case scenarios
Quit during a normal downswing
Assume bad luck means no edge
Solution : Use calculators from Wizard of Odds to see realistic variance ranges.
3. Playing Above Your Bankroll Playing stakes that are too high for your bankroll guarantees eventual ruin:
Playing $5/$10 poker with $5,000 (10 buy-ins = 30%+ ROR)
Betting $500 per game with $5,000 bankroll (10 units = 40%+ ROR)
Risking $500 per trade with $10,000 account (5% = 20%+ ROR)
Solution : Move down in stakes if you lose 25% of your bankroll.
4. Not Tracking Results
You don't know your real win rate
Can't calculate accurate ROR
Can't identify if you're on a normal downswing or actually losing
Solution : Log every trade, bet, and result.
How to Reduce Your Risk of Ruin
1. Increase Your Bankroll Double your bankroll = Square root of 2 reduction in ROR
20 buy-ins β 40 buy-ins: ROR drops from ~10% to ~3%
50 buy-ins β 100 buy-ins: ROR drops from ~1% to ~0.3%
2. Decrease Bet Size Halve your bet size = Square of reduction in ROR
5% per trade β 2.5% per trade: Massive ROR decrease
$200 bets β $100 bets: Significant ROR improvement
3. Improve Your Edge Even small improvements in win rate dramatically reduce ROR:
52% β 53% win rate: ~50% reduction in ROR
55% β 56% win rate: ~40% reduction in ROR
4. Reduce Variance Lower variance activities have lower ROR:
Switch from tournaments to cash games
Reduce number of tables (online poker)
Focus on lower-variance bet types
Use tighter stop losses (trading)
Advanced Risk of Ruin Concepts
Gambler's Ruin If you have no edge (50% win rate), your eventual probability of ruin is 100%. It's not a question of if, but when.
Key insight : You MUST have an edge to survive long-term.
Sequential Risk of Ruin If you play multiple sessions, your cumulative ROR increases:
Single session: 5% ROR
10 sessions: 40% cumulative ROR
50 sessions: 92% cumulative ROR
This is why even "safe" 5% ROR is too high for long-term play.
Risk of Ruin vs Risk of Drawdown Risk of ruin (complete bankroll loss) is different from risk of significant drawdown:
50% drawdown risk might be 30%
25% drawdown risk might be 60%
Complete ruin might be 1%
Most players quit during drawdowns, not complete ruin.
Conclusion Risk of ruin is the ultimate survival metric. Key takeaways:
Aim for <1% ROR for long-term successTrack your win rate with 100+ samplesKeep adequate bankroll (50-100 buy-ins/units)Risk 1-2% maximum per trade/betMove down in stakes if you lose 25% of bankroll Remember: You can't go broke if you manage your bankroll properly. Track everything, bet small, and survive long enough for your edge to play out.