Trade expectancy calculator
Expectancy is the only number that tells you whether a trading system actually makes money. Enter your win rate, average winning trade and average losing trade — get expectancy per trade in dollars and in R, your reward-to-risk ratio, the break-even win rate, and a projection over a chosen number of trades. Free and instant.
Reward-to-risk: — · break-even win rate: —
The formula
expectancyexpectancy = (winRate × avgWin) − (lossRate × avgLoss)
# Example: 45% win rate, +$300 winners, −$150 losers
= (0.45 × 300) − (0.55 × 150)
= 135 − 82.50 = +$52.50 per trade # 0.35R
A 45% win rate loses if your winners and losers are the same size — but with 2:1 reward-to-risk it makes $52.50 a trade. This is why win rate alone is a vanity metric, and why our win rate vs risk-reward guide insists you look at both.
A positive expectancy in a backtest can still fail live if it was curve-fit, if costs were understated, or if the sample was too small. Validate with out-of-sample data and a realistic fee model before risking capital.
Turning expectancy into a plan
- Compute expectancy from your real trade log, not a hopeful guess.
- Convert to R so you can compare systems on equal footing.
- Feed the edge into the Kelly calculator to bound your bet size.
- Stress it with the risk of ruin calculator before going live.
Frequently asked questions
What is trade expectancy?
Expectancy is the average dollar amount you can expect to win or lose per trade over a large sample. The formula is (win rate × average win) − (loss rate × average loss). A positive expectancy means the system makes money over time; a negative one means it bleeds, no matter how good individual trades feel.
Can a system with a low win rate be profitable?
Yes — this is one of the most important truths in trading. A 40% win rate is highly profitable if your average winner is three times your average loser. Expectancy, not win rate, decides profitability. Trend-following systems often win less than half their trades yet make money because the winners are far larger than the losers.
What is expectancy in R?
R is the amount you risk per trade. Expressing expectancy in R (expectancy ÷ average loss) normalises it: an expectancy of 0.35R means you make 35 cents for every dollar risked, on average. It lets you compare systems with different account sizes and is the basis of Van Tharp's System Quality framework.
How many trades do I need before trusting expectancy?
A handful of trades tells you almost nothing — variance dominates. Most practitioners want at least 100 trades, and ideally several hundred across different market conditions, before they trust an expectancy figure. Always pair it with out-of-sample testing to guard against curve-fitting.