Risk of Ruin Calculator

Category: Gambling
- May 09, 2025
| |

Calculate your Risk of Ruin (RoR) - the probability of losing your entire bankroll. Essential for bankroll management in gambling, trading, and other probabilistic endeavors. Use this calculator to determine how much capital you need to minimize your risk to an acceptable level.

Risk of Ruin Calculator

$
Your total starting capital
$
The amount risked per bet/trade
52.5%
Probability of winning each bet
Amount won on winning bets / amount lost on losing bets
Bet Sizing
Percentage of bankroll risked per bet
$
For calculating win rate and probability of reaching target
Maximum tolerable loss from peak bankroll
Volatility of returns (higher value = higher variance)
Your statistical advantage (can be negative)
Number of bets/trades to simulate
Desired risk of ruin percentage (e.g. 1%)
Simulation Settings
Faster More Accurate
1,000 runs
Statistical distribution of your betting/trading returns

Understanding Risk of Ruin

Risk of Ruin (RoR) is the probability that you will lose your entire bankroll (or a significant portion of it) during a series of bets or trades. Understanding this risk is crucial for proper bankroll management in gambling, trading, or any probabilistic endeavor.

Key Factors Affecting Risk of Ruin
  • Bankroll Size: Larger bankrolls provide more cushion against variance
  • Bet Size: Smaller bet sizes relative to bankroll decrease risk
  • Win Probability: Higher win rates significantly reduce risk
  • Win/Loss Ratio: The ratio between how much you win versus how much you lose
  • Variance: Higher volatility increases risk even with positive expected value
Bankroll Management Strategies
  1. Fixed Bet Size: Betting the same amount regardless of bankroll size
  2. Percentage Betting: Risking a consistent percentage of current bankroll on each bet
  3. Kelly Criterion: Mathematically optimal bet sizing based on edge and odds
  4. Fractional Kelly: Using a fraction of the Kelly bet to reduce variance
  5. Constant Risk: Adjusting position size to maintain consistent risk exposure
Risk Management Principles
  • Never risk more than you can afford to lose
  • A 1% risk of ruin is generally considered acceptable for professionals
  • Even with positive expected value, excessive bet sizing can lead to ruin
  • Psychological factors should be considered alongside mathematical analysis
  • Sequential correlation between bets/trades can significantly increase risk

Risk of Ruin Formulas

Basic Formula (Even Money Bets):
RoR = (1 - edge/spread)^bankroll
Where edge is your advantage as a decimal, and spread is your bet size
Exponential Formula:
RoR = e^(-2 * W * F * B)
Where W is advantage per unit, F is fraction of bankroll bet, B is bankroll units
Kelly Criterion:
f* = (p * b - q) / b
Where f* is optimal fraction, p is win probability, q is loss probability, b is win/loss ratio

Disclaimer: This calculator provides mathematical models based on probability theory and statistical analysis. Real-world outcomes may vary due to factors not accounted for in these models. Past performance does not guarantee future results. This tool is for educational purposes only and should not be used as the sole basis for financial decisions. Risk of ruin calculations assume independent trials with consistent probabilities, which may not reflect real-world conditions.

What Is the Risk of Ruin Calculator?

The Risk of Ruin Calculator is a powerful tool for estimating the probability of depleting your entire bankroll over a series of bets or trades. It provides crucial insights for anyone involved in betting, trading, or Gambling where the outcomes are based on probability. By helping you understand your odds of Financial failure under certain conditions, it supports smarter decision-making and risk control.

Risk of Ruin (Exponential Formula):
\( \text{RoR} = e^{-2 \times W \times F \times B} \)
Where:
W = advantage per unit bet
F = fraction of bankroll bet
B = number of bankroll units

How to Use the Calculator

This calculator features two modes—Basic and Advanced—each designed for different levels of detail and control:

  • Basic Mode: Enter your bankroll size, bet amount, win probability, and win/loss ratio. Select a bet sizing method: Fixed, Percentage of Bankroll, or Kelly Criterion.
  • Advanced Mode: Input standard deviation, edge percentage, and number of trials. You can also run Monte Carlo simulations for deeper risk insights.
  • Press the Calculate button to receive your Risk of Ruin percentage and Other helpful metrics.

What Does the Calculator Show You?

After inputting your information, the calculator displays:

  • Risk of Ruin: The chance of losing your entire bankroll
  • Expected Value per Bet: Your average return per wager
  • Probability of Reaching Target: Chance of hitting a profit goal before busting
  • Recommended Bankroll: Suggested capital for 1% or 0.1% ruin risk
  • Kelly Criterion Bet Size: The mathematically optimal wager amount
  • Drawdown Estimates: How much you might lose during a bad run

Why This Tool Is Useful

The Risk of Ruin Calculator acts as a betting odds tool, stake evaluation aid, and probability checker all in one. It’s ideal for:

  • Traders looking to manage capital exposure
  • Gamblers assessing betting odds and minimizing loss
  • Sports bettors exploring betting strategies and optimizing stake size

It complements other calculators such as an odds probability tool, Kelly Criterion Calculator, or sports betting odds estimator, by focusing directly on risk over time rather than a single outcome.

Frequently Asked Questions

What is “Risk of Ruin”?

It’s the probability that you’ll lose your entire bankroll through a series of bets or trades.

Who should use this calculator?

Anyone who wagers money with uncertain outcomes—traders, gamblers, bettors, and investors—can benefit from it.

What is the Kelly Criterion?

It’s a formula that calculates the ideal bet size to maximize long-term growth while minimizing the chance of ruin.

What if my edge is negative?

If your expected return is negative, your risk of ruin is effectively 100%. The calculator will reflect this.

Can this tool replace financial advice?

No. It’s a statistical and educational tool and should be used to support, not replace, professional advice.

Final Thoughts

The Risk of Ruin Calculator goes beyond basic betting odds estimation by giving you a full picture of long-term outcomes. Whether you're managing a poker bankroll, planning a trading strategy, or fine-tuning a wagering analysis, this tool helps you make informed, rational decisions. Use it in combination with a Kelly betting strategy, a payout probability guide, or a sports bet estimator for complete risk insight.