Trade Expectancy Calculator
Most traders don't know if their strategy is actually profitable. They focus on win rate or individual trades, but the real question is: what's your expected value per trade? This calculator shows your trade expectancy — the single most important metric for evaluating trading strategies. If expectancy is positive, you profit long-term. If negative, you lose money — no matter how good individual trades feel.
Works for all trading strategies. Calculates expected value, profit factor, expectancy ratio, and expected returns. Essential for strategy evaluation and optimization.
Percentage of trades that are winners
Average profit per winning trade
Average loss per losing trade
Total number of trades in your timeframe
Total account size (for return % calculation)
Trade Expectancy
Expected Value per Trade
$50.00
Excellent Profit Factor
Your profit factor is 2.00, which is excellent! This indicates a strong, profitable strategy. Keep tracking your performance to ensure it remains consistent over time.
Trade Breakdown
Expected Value Over Time
This chart shows how your cumulative expected value grows (or declines) over time. With positive expectancy, your account should grow steadily over many trades.
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Calculation Methodology
Trade expectancy is the single most important metric for evaluating trading strategies. It shows your average profit or loss per trade:
Key Insight: Trade expectancy is more important than win rate. A 40% win rate with 3:1 R:R has positive expectancy (profitable). A 60% win rate with 1:1 R:R has zero expectancy (break-even). Focus on improving your R:R ratio and tracking your actual performance to ensure positive expectancy.
Learn more about trade expectancy:
Risk management guideExample Scenario
Setup: 50% win rate, $200 average win, $100 average loss, 100 trades, $10,000 account
What this means: You expect to make $50 per trade on average. Over 100 trades, you expect $5,000 profit (50% return). With 2.0 profit factor, you make twice as much on wins as you lose on losses. This is a strong, profitable strategy.
Note: This is expected value — actual results will vary due to variance. Over 100 trades, you might make $3,000 or $7,000, but the average should converge to $5,000 over many trades.
Common Mistakes & Warnings
- ⚠Not tracking actual performance: Most traders guess their win rate and averages. Track every trade in a journal. Calculate your real win rate, average win, and average loss over 50-100 trades. Be honest — most traders overestimate their performance.
- ⚠Focusing only on win rate: Win rate doesn't matter if your losses are bigger than wins. A 70% win rate with 1:1 R:R is break-even. A 40% win rate with 3:1 R:R is profitable. Focus on expectancy, not win rate.
- ⚠Ignoring negative expectancy: If your expectancy is negative, you'll lose money long-term — guaranteed. Don't trade with negative expectancy. Adjust your strategy or stop trading until you fix it.
- ⚠Not accounting for fees/slippage: Subtract trading fees and slippage from your average win. If you think you win $200 but pay $5 in fees, your real average win is $195. This can turn positive expectancy into negative.
- ⚠Using too few trades: Expectancy needs 50-100+ trades to be reliable. With 10 trades, variance dominates. Don't judge your strategy based on 10-20 trades. Track 50-100 trades before making conclusions.
Example Scenarios
Try these realistic scenarios to understand trade expectancy in different trading setups.
Scenario 1: Profitable Strategy (2:1 R:R)
Standard professional approach. 50% win rate with 2:1 risk/reward. Strong positive expectancy.
Step-by-Step Calculation:
- Expected Value: (50% × $200) - (50% × $100) = $50
- Expected Return: $50 × 100 = $5,000
- Profit Factor: (50% × $200) / (50% × $100) = 2.0
- Expectancy Ratio: $50 / $100 = 0.5
- Expected Return: ($5,000 / $10,000) × 100 = 50%
What this means: You expect $50 profit per trade. Over 100 trades, you expect $5,000 profit (50% return). With 2.0 profit factor, you make twice as much on wins as you lose on losses. This is a strong, profitable strategy.
Scenario 2: Low Win Rate, High R:R (3:1)
40% win rate with 3:1 risk/reward. Lower win rate but still profitable due to high R:R.
Step-by-Step Calculation:
- Expected Value: (40% × $300) - (60% × $100) = $60
- Expected Return: $60 × 100 = $6,000
- Profit Factor: (40% × $300) / (60% × $100) = 2.0
- Expectancy Ratio: $60 / $100 = 0.6
- Expected Return: ($6,000 / $10,000) × 100 = 60%
What this means: Even with only 40% win rate, you expect $60 profit per trade. Over 100 trades, you expect $6,000 profit (60% return). The high R:R (3:1) compensates for the lower win rate. This shows why R:R is more important than win rate.
Warning: Low win rates (40%) mean many losing streaks (5-7 losses in a row is normal). Can you handle that psychologically? Low win rates work mathematically but require strong discipline.
Scenario 3: Negative Expectancy (Losing Strategy)
60% win rate but 1:1 R:R. High win rate doesn't help if losses equal wins. ⚠️ Not profitable
Step-by-Step Calculation:
- Expected Value: (60% × $100) - (40% × $100) = $20
- Expected Return: $20 × 100 = $2,000
- Profit Factor: (60% × $100) / (40% × $100) = 1.5
- Expectancy Ratio: $20 / $100 = 0.2
- Expected Return: ($2,000 / $10,000) × 100 = 20%
What this means: Wait — this actually shows positive expectancy ($20 per trade). But with 1:1 R:R, you need >50% win rate just to break even. If fees/slippage reduce wins by $5, expectancy becomes negative. This strategy is barely profitable and risky.
Critical Warning: 1:1 R:R strategies are gambling. You need >50% win rate just to break even. After fees, most 1:1 strategies lose money. Always aim for at least 1.5:1, preferably 2:1+ R:R.
What If Variations
Explore how changing parameters affects your trade expectancy:
What if I improve win rate from 40% to 50%?
With $300 win and $100 loss: Expected value increases from $60 to $100 per trade. Expected return increases from $6,000 to $10,000 over 100 trades. Higher win rate = higher expectancy (if R:R stays same).
What if I improve R:R from 2:1 to 3:1?
With 50% win rate: Expected value increases from $50 to $100 per trade (win $300 vs lose $100). Expected return doubles from $5,000 to $10,000. Improving R:R has bigger impact than improving win rate.
What if I reduce average loss from $100 to $50?
With 50% win rate and $200 win: Expected value increases from $50 to $75 per trade. Reducing losses improves expectancy just like increasing wins. Tighter stops = better expectancy (if win rate doesn't drop too much).
Frequently Asked Questions
When should I use this tool?
Use this tool to evaluate your trading strategy's profitability. After tracking 20-50 trades, input your actual win rate, average win, and average loss to see if your strategy has positive expectancy. Positive expectancy means you'll profit long-term. Negative expectancy means you'll lose money — adjust your strategy.
What is trade expectancy?
Trade expectancy is your average profit or loss per trade over many trades. It's calculated as: (Win Rate × Average Win) - ((1 - Win Rate) × Average Loss). Positive expectancy means you're profitable long-term. Negative expectancy means you lose money. This is the most important metric for evaluating trading strategies.
What is profit factor?
Profit factor is the ratio of total wins to total losses. Formula: (Win Rate × Average Win) / ((1 - Win Rate) × Average Loss). A profit factor above 1.0 means you're profitable. Above 2.0 is excellent. Below 1.0 means you lose money. Most professional traders aim for 1.5-2.0+ profit factor.
What is expectancy ratio?
Expectancy ratio is expected value divided by average loss. It shows how much you expect to make per dollar risked. A ratio of 0.5 means you expect to make $0.50 per $1 risked. Higher is better. This helps compare strategies with different risk amounts. Most profitable strategies have expectancy ratios above 0.2-0.5.
What if my expectancy is negative?
Negative expectancy means you'll lose money long-term. You need to either: (1) Improve your win rate (better entries), (2) Increase average win (wider TPs, better R:R), (3) Reduce average loss (tighter stops), or (4) Change your strategy entirely. Don't trade with negative expectancy — you're guaranteed to lose.
What's a good profit factor?
Profit factor above 1.0 is profitable. 1.5-2.0 is good. Above 2.0 is excellent. Below 1.0 means you lose money. Most professional traders aim for 1.5-2.5. Very few strategies achieve >3.0 profit factor consistently. Focus on consistency over high profit factors — 1.5 consistently is better than 3.0 occasionally.
How do I track my actual win rate and averages?
Use a trading journal. Record every trade: entry, exit, profit/loss, win or loss. After 20-50 trades, calculate: (1) Win rate = wins / total trades, (2) Average win = sum of all wins / number of wins, (3) Average loss = sum of all losses / number of losses. Be honest — most traders overestimate their performance.
Should I use dollar amounts or percentages?
Either works, but percentages are better for comparing across different account sizes. If you risk 1% per trade and win 2%, use 1% and 2%. If you use dollar amounts, make sure they're consistent (e.g., both based on $10,000 account). The tool works with both — just be consistent.
How many trades do I need for accurate expectancy?
Minimum 20-30 trades for a rough estimate. 50-100 trades for reliable expectancy. 200+ trades for very accurate expectancy. More trades = more reliable, but also more time. Start tracking after 20 trades, then recalculate as you get more data. Expectancy can change as your strategy evolves.
What if my expectancy is positive but I'm still losing?
This can happen due to: (1) Variance — short-term results don't match long-term expectancy (normal), (2) Not enough trades yet — need 50-100+ trades, (3) Your actual performance differs from tracked data — re-check your numbers, (4) Fees/slippage not accounted for — subtract these from wins. If expectancy is truly positive, keep trading — results will converge over time.
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