What is trading expectancy?

Expectancy is the average amount you can expect to win or lose per trade: win rate × average win − loss rate × average loss.

How is the break-even win rate calculated?

Break-even win rate = 1 ÷ (1 + reward/risk ratio). With a 1.5 reward/risk ratio you need a 40% win rate to break even before costs.

Does positive expectancy guarantee profits?

No. Positive expectancy only means profits are likely over a large number of trades. Short samples can lose due to variance, and costs reduce expectancy.

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Expectancy Calculator

Check whether your system has positive expectancy from win rate and average win/loss.

Inputs

Win rate (%)

60%

Average win Average loss

Risk per trade (optional)

Results

Expectancy per trade

+100

Break-even win rate: 40%

Expectancy per 100 trades

10,000

Reward/risk ratio

1.5

Expectancy in R

Win rate (%)

60%

Positive expectancy: profitable over many trades

Formula

Expectancy = win rate × average win − (1 − win rate) × average loss; break-even win rate = 1 ÷ (1 + RR)

Worked example

60% win rate, $300 average win, $200 average loss: expectancy $100 per trade, RR 1.5, break-even win rate 40%.

Calculation results are for educational purposes only and do not constitute investment advice. Always do your own research before trading.

Inputs

Results

Formula

Worked example

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