How to Calculate Risk of Ruin [closed]

I'm reading a book titled "A Trader's Money Management System" and it discusses risk of ruin(ROR) tables. It says that you can have a zero probability of ROR with a payoff ratio of 2 to 1 and a win rate of 60%.

• My understanding is that the concept of ROR originated in gambling, but is it applicable to trading and more importantly, does it work in real world trading?
• The book says a zero percent probability of ROR means that ruin is extremely unlikely, but not impossible. Doesn't that go against the definition of a zero percent probability?
• How do you calculate ROR? The book only includes a sample table. I googled it and this came up.

((1 - Edge)/(1 + Edge)) ^ Capital_Units

How do you fit the payoff ratio and the win rate into the edge?

• possible duplicate of How to estimate the probability of drawdown / ruin? Commented Oct 7, 2011 at 1:18
• Hi Tom, welcome to quant.SE. I could be wrong, but I have never heard of professional quants using such oversimplified "money management" techniques. I believe your question is off topic. Commented Oct 7, 2011 at 1:39
• Discussion of why this question was closed on meta. Commented Oct 7, 2011 at 15:30