Simulation Configuration
We are testing portfolio survival across a simulated streak of 50 random trades. Each trade is a coin-flip (50/50 probability) utilizing a solid 1:2 Risk-to-Reward ratio. If you risk 10% and lose, you lose 10%. If you win, you make 20%.
| Portfolio | Risk / Trade | Win Return | Current Capital | Status |
|---|---|---|---|---|
| Cyan | 1% | +2% | ₹1,00,000 | Surviving |
| Blue | 2% | +4% | ₹1,00,000 | Surviving |
| Yellow | 5% | +10% | ₹1,00,000 | Surviving |
| Orange | 10% | +20% | ₹1,00,000 | Surviving |
| Red | 25% | +50% | ₹1,00,000 | Surviving |
Mathematical Ruin
Because 50/50 odds with a 1:2 payout is a mathematically winning model, you would expect all accounts to grow. However, if a portfolio risks 25% or 10% per trade, any typical cluster of 4 or 5 consecutive losses will draw down the account by 50% to 90%, hitting the Ruin Threshold (capital $\le$ 10,000) and wiping them out before the statistical average plays in their favor.
1% Risk
2% Risk
5% Risk
10% Risk
25% Risk