Trading Expectancy Calculator

Expectancy is the single number that tells you whether a trading strategy makes money on average. It blends how often you win with how much you win versus lose, so a strategy that wins less than half the time can still have a positive edge - and one that wins most trades can still lose money. Enter your numbers above to see the average result per trade.

How to Use It

1. Enter your win rate - the share of trades that finish as winners.
2. Enter your average win and average loss - the typical amount gained on a winner and lost on a loser, in whatever units you trade in.
3. Optionally enter a number of trades to see the expected total over a run.

The calculator shows the expectancy per trade, the same figure in R-multiples (multiples of the amount you risk), the reward:risk ratio, and the break-even win rate.

The Formula

Expectancy is the average outcome per trade - the probability-weighted win minus the probability-weighted loss:

$$\text{expectancy} = (\text{win rate} \times \text{average win}) - (\text{loss rate} \times \text{average loss})$$

Measured in units of risk (R), where R is your reward:risk ratio, it simplifies to:

$$\text{expectancy (R)} = (\text{win rate} \times R) - (1 - \text{win rate})$$

This is the same expectancy figure used by the Monte Carlo simulator, which then shows the full range of outcomes that one average hides.

Break-Even Win Rate

At a given reward:risk, there is a win rate below which you lose money no matter what. It is the point where expectancy equals zero:

$$\text{break-even win rate} = \frac{\text{average loss}}{\text{average win} + \text{average loss}} = \frac{1}{1 + R}$$

So at 2:1 reward:risk you only need to win about 33.3% of the time to break even; at 1:1 you need 50%. The bigger your average win relative to your loss, the lower the win rate you can get away with.

Why Expectancy Is Not the Whole Story

A positive expectancy is necessary but not sufficient. The order your wins and losses arrive in, how big each position is, and plain bad luck all affect whether a real account survives long enough to collect that average. Two things to pair with this number:

• Position sizing - even a positive-expectancy strategy can blow up if each trade risks too much. Test it with the Monte Carlo simulator.
• The trade setup - the take profit & stop loss calculator turns price levels into the reward:risk you feed in here.

A Note on Risk

This is a simplified model: real win rates and average sizes drift over time, trades can be correlated, and fees and slippage eat into every result. It is a thinking tool, not financial advice. Numbers are unit-agnostic; use whatever currency you trade in.

Related Tools

• See the range of outcomes with the trading Monte Carlo simulator.
• Set price levels with the take profit & stop loss calculator.
• Measure realised returns with the ROI calculator.
• Combine independent probabilities with the probability calculator.