The Pain Gauge

FTMO Trader Scouting


Well-Known Member
This is something I've often wondered... as a person who risks about 2% max, typically 1%, my risk tolerance or pain I'm willing to take is that of 1-2%. If I slip beyond my practice maybe 5% is the most excruciating pain I've ever taken.

What would you think is the most pain anyone should endure on their account before cutting or even switching to paper?
the % of equity risk is only a small part of the calculation.

Risk of Ruin formula.

risk_of_ruin = ((1 – Edge)/(1 + Edge)) ^ Capital_Units

Here is how the math works out below after a series of 3 losers and 3 winners:
10k with 1 loss at 2% = $200 loss and acct is at $9800
$9800 with 2nd loss at 2% = $196 loss and acct is at $9604
$9604 with 3rd loss at 2% = $192.08 and acct is at $9411.92
I just found this off some other site but I thought it was funny:

(Obviously fake, bar by bar moves.) :p
FTMO Trader Scouting