HYPOTHETICAL SCENARIO
Risk stress test.
Explore the arithmetic of a repeated assumed loss. No prediction, probability or liquidation claim.
This is not observed account drawdown and does not replace the separate drawdown investigation.
Hypothetical loss sequence
Starting balance: $10,000.00 · Threshold balance: $9,500.00
Simple equivalent losses: 50. This approximation assumes each loss uses the original capital.
Compounded consecutive losses to reach or exceed the threshold: 52. Each assumed loss uses the remaining balance.
Balance at that count: $9,493.04.
Fractional simple counts are equivalents, not actual trades. Compounded counts round up only when the threshold has not yet been reached. A full loss of capital cannot be reached in a finite sequence of identical losses smaller than one hundred percent in this model.
| Consecutive losses | Remaining balance |
|---|---|
| 0 | $10,000.00 |
| 1 | $9,990.00 |
| 3 | $9,970.03 |
| 5 | $9,950.10 |
| 6 | $9,940.15 |
| 8 | $9,920.28 |
| 10 | $9,900.45 |
| 12 | $9,880.66 |
| 13 | $9,870.78 |
| 15 | $9,851.05 |
| 17 | $9,831.35 |
| 19 | $9,811.70 |
| 20 | $9,801.89 |
| 22 | $9,782.29 |
| 24 | $9,762.74 |
| 26 | $9,743.22 |
| 27 | $9,733.48 |
| 29 | $9,714.02 |
| 31 | $9,694.61 |
| 32 | $9,684.91 |
| 34 | $9,665.55 |
| 36 | $9,646.23 |
| 38 | $9,626.95 |
| 39 | $9,617.32 |
| 41 | $9,598.09 |
| 43 | $9,578.91 |
| 45 | $9,559.76 |
| 46 | $9,550.20 |
| 48 | $9,531.11 |
| 50 | $9,512.06 |
| 52 | $9,493.04 |
What the arithmetic leaves out
Real outcomes differ because of position sizing, variable losses, slippage, market gaps, multiple exposures, fees, execution, changing strategy behaviour and platform liquidation rules. The model assigns no probability to a loss sequence. An assumed loss is not a verified limit on a real trade.