Expectancy and Profit Factor Calculator
Free trading expectancy calculator. Enter win rate, average win and average loss to see expectancy per trade, profit factor and break even win rate.
Expectancy is the average amount you can expect to win or lose per trade over many trades. It is the single number that tells you whether a trading system makes money, and it combines how often you win with how much you win and lose. A strategy with a 35% win rate can have strong positive expectancy, while one that wins 80% of the time can lose money. Enter your figures from a backtest or, better, from your own trading journal to see where you stand.
Calculator#
- Calculator
- Turn on JavaScript to use it, or use the formula below
How it works#
Expectancy = (Win rate × Average win) - (Loss rate × Average loss)
Payoff ratio = Average win / Average loss
Profit factor = (Win rate × Average win) / (Loss rate × Average loss)
Break even win rate = 1 / (1 + Payoff ratio)Use net figures after commissions and slippage. See Expectancy and Profit Factor.
Expectancy in R multiples#
Many traders express results in R, where 1R is the amount risked per trade. Expectancy in R lets you compare systems regardless of position size. If a trader risks $150 per trade and earns $30 per trade on average, expectancy is 0.2R. A system with 0.2R expectancy, risking 1% per trade, would on average add about 0.2% to the account per trade, before considering the order of wins and losses. See Fixed Percentage vs Fixed Dollar Risk.
| Expectancy (R) | Interpretation |
|---|---|
| Below 0 | Losing system |
| 0 to 0.1R | Marginal; small cost changes can erase it |
| 0.1R to 0.3R | Solid for many strategies |
| Above 0.5R | Excellent, if from a large sample |
How many trades do you need?#
Expectancy from 20 trades is mostly noise. With a typical spread of results, you need dozens to hundreds of trades before the estimate is reliable. Check whether removing your single best trade turns expectancy negative; if it does, the result depends on luck. See Statistical Significance in Trading and Sampling and Standard Error.
Improving expectancy#
| Lever | How |
|---|---|
| Raise win rate | Better entries, filters, avoiding poor conditions. See Entry Mechanics |
| Raise average win | Let winners run, trail stops. See Exit Mechanics |
| Lower average loss | Honour stops, cut losers quickly. See Stop Loss Strategies |
| Cut costs | Fewer, better trades; cheaper execution. See Transaction Costs |
| Trade more often | Only if each trade keeps positive expectancy |
Common mistakes#
- Using gross figures that exclude costs.
- Mixing different setups with different expectancies into one number.
- Small samples treated as proof.
- Ignoring outliers: one huge loss can dominate. Track the largest loss too. See MAE and MFE.
- Not updating: expectancy can decay as markets change. See Signal and Alpha Decay.
Frequently asked questions#
What is trading expectancy?#
The average profit or loss per trade over many trades, calculated from win rate, average win and average loss.
What is a good expectancy?#
Any positive expectancy after costs, from a large enough sample, is useful; many traders aim for 0.2R or more per trade.
Can a low win rate system be profitable?#
Yes, if the average win is large enough relative to the average loss to keep expectancy positive.
Next, measure growth over time with the Compound Growth and CAGR Calculator.
3 quick questions on this lesson. Get them all right to finish it.
Turn on JavaScript to take the quiz.
Mentioned in
- Margin and Leverage CalculatorCalculators
- Formula LibraryReference