// Resources
Risk of Ruin Explained
An estimate of whether your risk per trade is too high for your win rate and payout profile.
Formula
Probability of losing enough capital to stop trading
Why it matters
Even profitable strategies can blow up if position sizing is too aggressive relative to drawdown tolerance.
Example
A 45% win rate strategy risking 5% per trade may have much higher ruin risk than the same strategy risking 0.5%.
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