Risk simulator: losing streaks and drawdowns
Even with a statistical edge you will meet losing streaks and drawdowns. This tool shuffles win-loss sequences 5,000 times to show how risk per trade drives volatility of your capital.
Formula checked against worked examples · Last reviewed 2026-10-05
Assumes every trade is independent, with a fixed win rate and R:R, and no spread, slippage or commission. Real markets are usually worse than the model. Numbers are random and change on every click. Use it to see how risk per trade affects the volatility of your capital, not to judge whether your system works.
How to use
- Enter win rate, R:R and risk per trade.
- Enter number of trades and press simulate.
- Try 1% risk per trade, then 5%, and compare.
Formula
Win: capital × (1 + risk × R:R). Loss: capital × (1 − risk). Outcomes are random by win rate; drawdown is measured from peak.
Example
Default settings: win rate 45%, R:R 1.5, 2% risk, 100 trades. Results change on each click because they are random. Lower the risk per trade and watch the odds of a 20% and 50% drawdown fall.
Hypothetical example to explain the formula. It is not real market data and not a trading recommendation.
Frequently asked questions
- Can the simulation tell me whether my system will profit?
- No. It assumes independent trades and no costs. Real markets are usually worse. Use it to understand risk, nothing more.
- Why do results differ every click?
- It uses random draws. With 5,000 runs the numbers are close but not identical.
Limits and risk
This tool is educational. Results are estimates from the numbers you enter and are not investment advice. Trading CFDs is high risk and you can lose everything. Read the full risk warning
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