Risk of ruin, and why "eventually right" is not a plan
You can be right on average and still be out of the game.
4 minute read · updated with the phase that shipped this page
Ruining an account is a permanent outcome, unlike a losing streak. If a strategy needs you to survive a 40% drawdown and your position sizes can produce one, the strategy's expected value is irrelevant to your actual result.
The arithmetic of compounding makes this worse than it looks: a 50% loss requires a 100% gain to recover. Drawdowns are asymmetric, and being forced out at the bottom converts a temporary loss into a final one.
This is why the virtual portfolio shows drawdown and concentration, and why the calculator refuses stakes above a million dollars: the tool should not be able to produce a number that reads like a real position size.
The honest summary of everything on this page: prediction markets can be researched rigorously, and the people who do it well tend to be more interested in their sizing and their error rate than in being certain.
- What is the largest drawdown my sizing allows?
- If that drawdown happened, would I still be able to trade?
- Am I trading to learn, to express a view, or to recover a loss?
Educational material only. Qvicom Signal is not a broker, exchange or adviser, cannot place orders, and does not accept deposits or wagers.