Risk Of Ruin In Trading

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Most traders are optimists, but the difference between defense and attack is often tiny. We often ignore the risk of ruin in trading. Can the risk of ruin in trading be calculated?

Yes, the risk of ruin in trading can be calculated by using certain formulas that require some assumptions. The formulas are not perfect, but they are approximations.

Trading is speculation on the unknown, otherwise it would be impossible to make any money, and we need to have a basic understanding of the risks of losing our trading stake. Furthermore, black swans are per definition (negative) surprises and you need to prepare for the unknown unknowns.

What is the risk of ruin in trading?