How trade expectancy is calculated
Expectancy blends the two numbers traders usually look at alone, win rate and payoff, into the one number that decides whether a strategy makes money. If W is your win rate as a decimal:
The calculator treats your average loss as one unit of risk, so expectancy in R is the same answer as the R-multiple calculator gives, whatever currency or account size you trade. The break-even win rate is the win rate at which E is exactly zero for your payoff; the break-even win rate calculator adds trading costs to that number.
A worked example, step by step
Your last 50 trades show a 40% win rate, an average winner of $300 and an average loser of $150. You take about 20 trades a month.
You lose more trades than you win and still make money, because each winner is twice the size of each loser. Your 40% win rate sits 6.67 points above the 33.33% you need. Drop to a 33% win rate with the same payoff and E becomes 0.33 × 300 - 0.67 × 150 = 99 - 100.5 = -$1.50 per trade: a small change in win rate turns a winning strategy into a losing one. That is why a real sample of trades matters more than a gut feel for your numbers.
Positive expectancy is not the whole story. Losing runs still happen, so check how long yours can get with the losing streak calculator, then size so you survive them with the position size calculator and the risk of ruin calculator. The profit factor glossary entry covers the other ratio on this page.
How the RB Trading Pro Journal does this for you
The RB Trading Pro Journal works out your win rate, average R, expectancy and longest losing streak from your real imported trades, so the numbers on this page come from your own record rather than a guess. Import from your broker or log by hand, and every stat updates as each trade closes, split by setup, market and session so you can see which part of your trading carries the edge.
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Frequently asked questions
What is trade expectancy?
Trade expectancy is the average profit or loss you can expect per trade over a large number of trades. It combines win rate and payoff in one number: expectancy = (win rate × average win) minus (loss rate × average loss). A positive number means the strategy makes money over enough trades.
What is a good expectancy in trading?
Any expectancy above zero after costs is an edge. Measured in R, around +0.1R to +0.3R per trade is a workable edge for an active strategy, and above +0.5R is strong. A small positive expectancy traded often can earn more than a large one traded rarely.
How is expectancy different from profit factor?
Expectancy tells you how much you make per trade on average. Profit factor is gross profit divided by gross loss, so it tells you how much you win for each dollar you lose. A profit factor above 1 always means positive expectancy, but expectancy is the number that scales with how many trades you take.
Can a strategy with a low win rate have positive expectancy?
Yes. A 35% win rate with winners three times the size of losers gives 0.35 × 3 - 0.65 × 1 = +0.40R per trade. What matters is your win rate compared with the break-even win rate for your payoff, which this calculator shows.
How many trades do I need to trust my expectancy?
Below about 30 trades the average is mostly noise. At least 100 trades from the same setup, net of costs, gives a far more reliable estimate, and it keeps improving as the sample grows.