Risk of ruin
Risk of ruin is the probability that trading capital falls to a specified level at which trading cannot continue. It depends on position sizes, the pattern of gains and losses, and modelling assumptions; ruin need not mean losing the entire balance.
In a hypothetical simulation, ruin means equity falling below $500. If 80 of 1,000 simulated paths reach that threshold, the estimated risk is 8% under those assumptions.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Glossary definitions are general education only and are not investment advice. Risk disclosure