Risk of ruin
The chance of losing your whole bankroll before your edge pays off.
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- What it means
- Risk of ruin is the probability that the running total falls by the full bankroll at some point.
- How it is calculated
- The simulator counts the share of simulated careers whose lowest point is below minus the bankroll. The formula exp(−2 × ROI × bankroll ÷ sd²) gives the same for a career with no end date.
- Worked example
- With a 20% ROI and a standard deviation of 6 buy-ins, a 150 buy-in roll has a formula risk of ruin of exp(−2 × 0.2 × 150 ÷ 36) ≈ 19%.
- Why it matters
- Choosing a risk you can accept, such as 5%, turns bankroll management from a rule of thumb into a number.
Try it: Poker math, Variance and bankroll calculator, Cash game variance calculator
Formula and worked example: Risk of ruin in poker math
Lessons that teach it: How a winning player still goes broke · lessons other than the free one need an invite