Risk of Ruin combines three numbers into one probability: your win rate, your risk-per-trade as a fraction of equity, and the streak-length distribution the math implies. Even a 60%-win-rate strategy can have a 5%+ risk of ruin if you're sizing each trade at 5% of equity. Push the size up and the probability climbs fast — there's a step-function around the point where you can survive a worst-case streak.
The key insight is that ruin has nothing to do with your strategy's expected value. A strategy with positive expectancy can still ruin you if the per-trade risk is wrong. That's why "the strategy works" is half the answer — the other half is "and the sizing lets it work over the relevant time horizon."
Rough zones traders should know: - Below 1% — proper edge, proper sizing. Most professional managers operate here. - 1-5% — workable but uncomfortable. One bad regime and you're rebuilding. - 5-20% — most retail traders live here without realising it. Plays out as "I do well for a quarter, blow up for a month, repeat." - Above 20% — coin-flip territory dressed as strategy. Ruin within a year is the base case.
Risk of Ruin is the metric that shifts a trader from "let me try a slightly bigger position" to "let me size so I'm still here in 12 months." It's not glamorous. It's the math of survival, not of profit. But every trader who's still in the game after five years is implicitly running a low risk of ruin — they sized for the worst streak they'll ever see, not the average one.
In TradeOnyx you don't have a single "Risk of Ruin" tile because the calculation depends on assumptions (how long is the worst streak you've never seen yet?). Instead the dashboard surfaces the inputs to risk of ruin: your rolling win rate, your average risk-per-trade, and your maximum drawdown as a percentage of peak equity. All three are in the Overview tab, all three update every closed trade.
When the Profile-tab risk setting drifts upward — "I'll do 3% per trade now instead of 1.5%" — that single change can move risk of ruin from 0.5% to 8%. TradeOnyx writes that setting into your trade flags so you see, in retrospect, exactly when you stopped sizing for survival and started sizing for hopium.