Risk of ruin model
A discrete random-walk model shows how often an assumed process reaches zero or an upper boundary.
Enter a scenario
Use one currency and unit throughout. Every field is required; no market or personal financial data is loaded.
Scenario result
Fill in every field and the result appears here as you type. An empty field is missing information, not zero.
Sources and scope
Checked November 5, 2026.
Risk of ruin model uses the formulas shown above and assesses no personal financial circumstances.
Follow a finite-horizon probability model
The model starts at the entered integer state and moves exactly one unit up or down at each step. The supplied probability remains fixed. Zero and the upper target are absorbing boundaries: once a path reaches one, it remains there for the rest of the modeled horizon.
Hypothetical example: starting at one with an upper boundary of two, a single step with a 50% upward probability reaches zero on half the modeled paths and the upper boundary on the other half. For more distant boundaries or a shorter horizon, some paths can reach neither. The three reported probabilities distinguish those possibilities rather than treating an unfinished path as a success.
The number of steps is a mathematical horizon, not elapsed trading time. The model does not include variable transaction sizes, changing probabilities, fees or dependencies between events. It cannot estimate a person’s real financial risk from a balance alone. Use the displayed assumptions to interpret the calculation’s limited meaning.