Trading expectancy calculator
A strategy either has positive expectancy or it does not, and no amount of discipline fixes the second case. Enter your numbers to see what it earns per trade, the win rate it needs to break even, and the losing runs to expect along the way.
What the number means
Expectancy of +0.4R means that across a large number of trades you make, on average, four tenths of what you risk on each one. Risk 0.5% a trade and that is 0.2% of the account per trade — which sounds like nothing until you take forty trades a month.
The useful part is not the headline figure, it is what it does to how you feel about a losing run. A 40% win rate is profitable at 2.5R per winner, and it also means six losses in a row will happen roughly once every couple of hundred trades. That run is not a signal that anything is broken. It is the strategy behaving exactly as described, and the only thing that turns it into a disaster is the decision to change everything in the middle of it.
Breakeven win rate
For any reward-to-risk ratio there is a win rate below which you lose money: 1 ÷ (1 + R). At 1R you need to win more than half the time. At 2R you need a third. At 3R, a quarter. This is why traders chasing a high win rate so often end up unprofitable — cutting winners early to keep the hit rate up raises the win rate you need faster than it raises the one you have.
Why your real numbers beat your remembered ones
Almost everyone overestimates their win rate and underestimates their average loss, because the trades that get remembered are not a random sample. The fix is boring and it works: record every trade as you take it, in R, with the setup attached, and read the numbers off the record instead of off your memory.
That is what the journal in TradeDrill does — expectancy, win rate and R-multiples broken down by setup, session and timeframe, from trades you tagged at the time rather than reconstructed afterwards. It is free, and it usually shows that one or two setups are carrying everything and the rest are quietly giving it back.
More on reading your own record in how to keep a trading journal you'll actually keep.
Questions
What is expectancy in trading?
Expectancy is the average amount you win or lose per trade, once win rate and the size of wins and losses are taken together. It is (win rate × average win) − (loss rate × average loss). Positive means the strategy makes money over enough trades; negative means no amount of discipline will save it.
What is an R-multiple?
R is the amount you risked on a trade. A trade that made three times what you risked is +3R; one stopped out for the full amount is −1R. Measuring in R rather than cash lets you compare trades of different sizes, and makes a strategy's results independent of the account it was traded on.
Is a high win rate good?
Not on its own. A 90% win rate that risks 5R to make 0.5R loses money. A 35% win rate making 4R per winner is strongly profitable. Win rate only means something alongside the size of the average win and loss, which is exactly what expectancy combines.
How many trades before I can trust the number?
More than most people use. Below about 30 trades the figure is mostly noise; 100 or more starts to be meaningful, and even then a strategy tested in one kind of market can fail in another. Treat a small sample as a hint, not a result.
These calculators are for education and planning. They are not financial advice, and no calculator can tell you whether a trade is a good idea. Trading carries risk of loss.