Risk of ruin

Risk of ruin is the chance that a run of losses takes an account down to a level you cannot or will not trade on from, such as a 50% loss. It depends on win rate, payoff and risk per trade. Risk per trade is the one you control, and the chance grows fast as it rises.

With a 40% win rate and wins twice the size of losses, simulated runs of 200 trades fell 30% from their peak in 0.3% of runs at 1% risk a trade, 19% at 2%, and 60% at 3%.