---
title: "Risk of ruin - Meaning & GFN's Figure - Get Funded Now"
description: "The probability that a sequence of trades takes an account to its breach level before it reaches its target, given a win rate, a reward-to-risk ratio and…"
url: "https://getfundednow.com/glossary/risk-of-ruin"
language: "en"
last_modified: "2026-09-22"
publisher: "Get Funded Now (getfundednow.com)"
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  es: "https://getfundednow.com/es/glossary/risk-of-ruin"
  pt-BR: "https://getfundednow.com/pt-br/glossary/risk-of-ruin"
  fr: "https://getfundednow.com/fr/glossary/risk-of-ruin"
  it: "https://getfundednow.com/it/glossary/risk-of-ruin"
  de: "https://getfundednow.com/de/glossary/risk-of-ruin"
disclosure: "All trading at Get Funded Now is simulated. 'Funded' means a simulated or virtual account; GFN is not a broker and does not hold client funds."
---

Drawdown and risk limits

# Risk of ruin

The probability that a sequence of trades takes an account to its breach level before it reaches its target, given a win rate, a reward-to-risk ratio and a risk per trade. It is driven mostly by position size.

GFN’s figure

Against GFN's drawdown floors, risk per trade is the variable that decides survival: a 8% floor on the 2 Step absorbs 16 consecutive 0.5% losses, or four at 2%.

- **2 Step Consecutive losses to the 8% floor at 0.5% risk**: 16
- **2 Step At 1% risk**: 8
- **2 Step At 2% risk**: 4

A rough count that ignores compounding and trading costs; both make the real number smaller.

In detail

## Risk of ruin, explained

Risk of ruin is the honest way to look at an evaluation, because it accounts for the order trades arrive in. A strategy with a positive expectancy still fails a fixed drawdown if a losing streak happens to come first, and streaks are far more common than intuition suggests.

Halving risk per trade usually cuts risk of ruin by far more than half. That is why the same strategy that fails at 2% per trade frequently passes at 0.5%, with no change to the entries at all.

[Rules handbook](https://getfundednow.com/rules) · [More drawdown and risk limits](https://getfundednow.com/glossary/category/drawdown)

Related

## Terms that come with it

Most rules only make sense next to the ones they interact with. These are the entries this one depends on.

- [Maximum consecutive losses](https://getfundednow.com/glossary/maximum-consecutive-losses) - The longest unbroken run of losing trades in a sample. Multiplied by risk per trade it gives the drawdown a strategy has historically produced, which is the figure a fixed floor has to absorb.
- [Position size](https://getfundednow.com/glossary/position-size) - How many lots a trade is placed in. It is calculated from the dollar amount being risked and the stop distance, not chosen first - which is the reverse of how most traders approach it.
- [Fixed fractional](https://getfundednow.com/glossary/fixed-fractional) - Risking a constant percentage of equity on every trade, so position size falls after losses and rises after gains. It is the standard position-sizing model and the one most prop rules assume.
- [Expectancy](https://getfundednow.com/glossary/expectancy) - The average result of a trade over a large sample, combining win rate and average win and loss. A positive expectancy is necessary for a strategy to work and not sufficient for it to pass an evaluation.
- [Drawdown recovery](https://getfundednow.com/glossary/drawdown-recovery) - The gain required to return an account to its previous peak after a loss. Recovery is not symmetrical: a 10% loss needs an 11.1% gain to undo, and a 50% loss needs 100%.

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Source: https://getfundednow.com/glossary/risk-of-ruin
Facts about Get Funded Now in one file: https://getfundednow.com/llms.txt