Use this free trade expectancy calculator to turn your win rate and your average win and loss into the number that actually decides whether a strategy makes money.
How the trade expectancy calculator works
Enter your win rate, your average winning trade and your average losing trade as a positive figure. Optionally add how many trades you take in a period. The tool returns expectancy per trade in dollars and in R, the payoff ratio, the profit factor, the breakeven win rate, and the expected total across the period.
Why expectancy beats win rate
Win rate on its own says nothing. A 90% win rate that risks $1,000 to make $50 is a losing strategy; a 35% win rate at 4:1 is a strong one. Expectancy collapses both halves into a single number — the average value of one trade — and it is the only figure that answers whether trading the strategy more often makes you more money or loses it faster.
A worked example
Suppose you win 40% of the time, your average win is $300 and your average loss is $100. Expectancy is $60 per trade, or 0.6R per unit risked. The payoff ratio is 3:1, the profit factor is 2.0, and the breakeven win rate is 25%. Over 200 trades that is an expected $12,000 before costs. Now hold everything constant and drop the win rate to 25%: expectancy falls to exactly zero and profit factor to exactly 1.0 — the same setup, no longer worth trading.
How to read the results
Expectancy in R is the number to track, because it survives changes in position size. Profit factor is a useful cross-check: below 1.0 the strategy loses money, and the two cross their neutral points at the same win rate. If expectancy is barely positive, the strategy may still be unprofitable in practice once spread, commission and slippage are subtracted.
Common mistakes
The first is computing expectancy before costs and stopping there. Commission, spread and slippage come straight out of the average win and straight into the average loss, and they have sunk many strategies that looked fine on paper.
The second is trusting a small sample. Thirty trades can easily produce a positive expectancy that is not real, and one outsized winner can carry an average that never repeats. Recompute as the sample grows, and look at the median alongside the mean if a few trades dominate.
The third is treating expectancy as a per-trade promise. It is a long-run average around which individual results vary widely — a positive-expectancy strategy still delivers long losing streaks, which is exactly why risk of ruin is a separate question worth asking.
Where to go next
Expectancy is only as good as the inputs, and the inputs come from a tested record — how to backtest a strategy the right way covers how to produce numbers worth trusting, and what overfitting does to a backtest covers how they go wrong. A positive expectancy still delivers long losing streaks, so pair this with the risk of ruin simulator. If you are weighing a single setup rather than a whole record, the risk / reward calculator is the faster route, and mean reversion vs trend following explains why win rate and payoff tend to trade off against each other.
Frequently asked questions
What is a good trade expectancy?
Any positive number after costs is a working edge. The size determines how hard it is to detect and how much variance you have to sit through.
How is expectancy different from profit factor?
Expectancy is per trade, in currency or R; profit factor is a ratio across the whole sample. Both cross their neutral point at the same win rate.
Should I enter the average loss as a negative number?
No — enter it as a positive size. The formula applies the sign.
Educational tool, not financial advice. Past and modeled results do not guarantee future performance.
Where to invest: brokers with fractional shares
To act on what this tool shows you, you’ll need a brokerage account. These are established brokers we use that support fractional shares — buying a slice of a share by dollar amount, which makes dollar-cost averaging and diversifying with small amounts easy:
- Robinhood — commission-free investing with fractional shares from $1, and the only major broker offering a daily recurring-investment schedule. Recommended for most beginner-to-intermediate investors who want the simplest way to automate investing — see how to automate your investing for the full setup.
- Charles Schwab — fractional shares of most U.S.-listed stocks and ETFs from $1, commission-free online.
- Fidelity — “Stocks by the Slice” fractional investing from $1, with strong research and low-cost index funds.
Referral disclosure: the broker links above are referral links. If you open and fund an account through them we may receive a referral reward at no cost to you; it never affects our tools or conclusions. This is educational information, not investment advice — choose the broker that best fits your needs.