The formula
Expectancy can be in money (dollars per trade) or in R, where 1R is the amount you risk. R makes strategies comparable regardless of account size.
Example in dollars
You win 40% of trades with an average win of $250 and lose 60% with an average loss of $100. Expectancy = 0.4 × 250 − 0.6 × 100 = 100 − 60 = +$40 per trade. Over 100 trades you would expect about $4,000, before costs.
The same example in R
Risking $100 per trade, the average win is 2.5R and the average loss is 1R. Expectancy = 0.4 × 2.5 − 0.6 × 1 = +0.4R per trade, the same result in different units.
Why a high win rate is not enough
A 70% win rate with an average win of 0.4R and an average loss of 1R gives 0.7 × 0.4 − 0.3 × 1 = −0.02R. It loses a little on every trade despite winning most of them. Only the combination of win rate and payoff matters.
Limits of expectancy
- It is an average. It says nothing about losing streaks or drawdowns. Test those in the strategy simulator.
- It needs enough trades. With under about 100 trades, your measured win rate and average win can be far from the truth.
- It ignores costs unless you include them. Subtract fees and slippage per trade.
Calculate yours with the expectancy and break-even calculator, and see how it feeds position sizing in how much to risk per trade.
Try it with your own numbers
Free calculators that do the math for you. No signup, and nothing leaves your browser.
A positive expectancy starts with a good setup.
Indicators can help you pick setups where winners are larger than losers.
Keep reading
Last updated October 2026. For education only. Not financial advice.