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Trading Expected Value Calculator (win rate × risk-reward)

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Understanding the trading expected value calculator — concept and principle

Expected value (EV) tells you what a trading strategy earns or loses per trade on average, combining how often you win with how much you win and lose. Traders use it to judge whether a system has an edge and to compare strategies with different styles.

A balance scale with 45 winning trades on one pan and 55 losing trades on the otherOver 100 trades, 45 wins of $300 add $13,500 and 55 losses of $200 take $11,000. The difference is $2,500, or $25 per trade. With a 1.5 risk-reward, the break-even win rate is 40%.Wins and losses on one scale45 wins × $300$13,50055 losses × $200$11,000per trade: $135 − $110 = $25× 100 trades = $2,500break-even win rate 40%your win rate 45%
A 45% win rate with $300 wins and $200 losses averages $25 per trade.

How it is calculated

With win rate w, average win W and average loss L (entered as a positive amount):

EV per trade = w × W − (1 − w) × L

Total over N trades = EV × N. The calculator also shows:

The principle

EV is the probability-weighted average of the possible outcomes, a basic idea of probability theory. A strategy that wins 45% of the time is not necessarily bad; what matters is whether the wins are large enough to pay for the losses. Setting EV to zero and solving for w gives the break-even win rate, so a 1.5 risk-reward needs to win only 40% of trades. The law of large numbers says that the average result over many independent trades moves toward the EV, which is why it is multiplied by N. Over a small number of trades, luck dominates.

Worked example

  1. Defaults: win rate 45%, average win $300, average loss $200, 100 trades.
  2. Expected winnings = 0.45 × 300 = $135; expected losses = 0.55 × 200 = $110.
  3. EV per trade = 135 − 110 = $25.00; over 100 trades = $2,500.00.
  4. Risk-reward = 300 ÷ 200 = 1.5; break-even win rate = 200 ÷ 500 = 40%.
  5. Profit factor = 135 ÷ 110 = 1.23.

How to read the result

Where does your result fall?LosingRobust1≥2LosingFragile edgeRobustYour result: 1.23 · Fragile edgeReference: Profit factor > 1 is profitable; ~1.5+ often seen as robust
Where does your result fall?

A positive EV means an edge, but the size matters relative to costs: commissions, spreads and slippage should already be inside the average win and loss. A profit factor above 1 means profitable; many traders treat values around 1.5 or higher as robust and values just above 1 as fragile, because a small drop in win rate can erase the edge. Compare your actual win rate with the break-even rate: here 45% against 40% leaves a five-point safety margin.

Common mistakes

Keep in mind: EV assumes your past win rate and average sizes will hold in the future and that trades are independent. Markets change, so this is a planning tool, not financial advice or a guarantee.

Frequently asked questions

Can a strategy with a win rate below 50% be profitable?

Yes. If the average win is large enough, as in trend-following systems, a 35–45% win rate can still give a positive EV.

How many losing trades in a row should I expect?

With a 55% loss rate, a run of 5 losses has a probability of about 5% at any given point (0.55 to the power 5), and over 100 trades such streaks are likely to appear. Size positions so you can survive them.

What is the difference between EV and profit factor?

EV is an amount per trade; profit factor is a ratio that does not depend on trade size, so it is handy for comparing systems.

Sources: Standard probability theory (expected value, law of large numbers)

Checked 8 Nov 2026. Standard financial mathematics (time value of money). Estimates for information only — not financial advice.

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