Risk of ruin
Also called: losing streak
The chance of losing so much capital that a trader cannot, or will not, continue.
Risk of ruin rises sharply with risk per trade. With negative expectancy ruin is only a matter of time; with positive expectancy, large risk per trade can still cause ruin because normal losing streaks are longer than intuition suggests.
Learn more in these lessons
- Expectancy, losing streaks and risk of ruinCan a strategy that wins most of the time still lose money?
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