Win Rate / Expectancy Calculator

How the calculation works

Expectancy is the average amount you should make (or lose) per trade if your historical win rate and average win/loss continue. The calculator converts win rate to a probability, treats losses as one minus that probability, then computes (win rate × average win) − (loss rate × average loss). It also shows payoff ratio (average win ÷ average loss) so you can see whether edge comes from frequency, size, or both.

Formula & example

Expectancy = (win rate × avg win) − (loss rate × avg loss)

45% wins averaging $300, 55% losses averaging $200 → expectancy = 0.45×300 − 0.55×200 = $25.

Why use this calculator

A high win rate with tiny wins and large losses can still have negative expectancy. This metric answers the only question that matters for long-run survival: does the average trade add money after both outcomes?

When to use it

Use it when reviewing a trade journal, backtest summary, or paper-trading log with enough closed trades to estimate averages — not from a handful of anecdotes.

Background

Mathematical expectation (expected value) dates to 17th-century probability work on games of chance (Pascal, Fermat, and later Huygens). Traders adopted the same idea as “expectancy” to judge systems by average profit per trade rather than win rate alone.

Tips for accurate results

• Use realized averages including fees.
• Sample size matters — small journals overfit.

FAQ