Each "trade" draws from your win-rate distribution: with probability p you win winR × risk, otherwise you lose lossR × risk. The simulator runs your full sequence of N trades 10,000 times and counts how often you hit the ruin threshold before finishing. Industry rule-of-thumb: risk-of-ruin should be <1% for serious capital. If yours is >5%, reduce per-trade risk before considering it a real edge.