Expectancy in Trading: The Formula, With Worked Examples
Win rate alone says nothing. Expectancy sets it against your average win and loss, in R, and shows where a strategy breaks even.
3 Nov 2026 · 5 min read
On this page
Expectancy is the average result of one trade, measured in units of what you risked. Multiply your win rate by your average win, multiply your loss rate by your average loss, and subtract. A positive number means that, across the trades you measured, the average trade made money; a negative one means it lost.
The formula
Expectancy = (win rate × average win) − (loss rate × average loss), with the wins and losses written in R, where 1R is the amount you risked on that trade (the distance to your stop, times your size). Writing results in R instead of money puts a small account and a large one on the same scale, and a trade risked at 0.5% beside one risked at 2%. Position sizing decides what 1R is in money; expectancy does not care.
If you do not track R, the same sum works in money: average win and average loss in your account currency. It then describes only that account at that size.
Four worked examples
These are made-up inputs to show the arithmetic. They are not anyone's results, and no row is a suggestion of what to trade.
| Case | Win rate | Average win | Average loss | Expectancy per trade | Break-even win rate |
|---|---|---|---|---|---|
| A | 40% | 2.0R | 1.0R | +0.20R | 33.3% |
| B | 50% | 1.0R | 1.0R | 0.00R | 50.0% |
| C | 70% | 0.5R | 1.5R | −0.10R | 75.0% |
| D | 30% | 3.0R | 1.0R | +0.20R | 25.0% |
- A: 0.40 × 2.0 − 0.60 × 1.0 = 0.80 − 0.60 = +0.20R. It loses more often than it wins and still averages a gain, because the wins are twice the size of the losses.
- B: 0.50 × 1.0 − 0.50 × 1.0 = 0. Half wins, equal size: the average trade neither gains nor loses, before costs.
- C: 0.70 × 0.5 − 0.30 × 1.5 = 0.35 − 0.45 = −0.10R. A 70% win rate that loses on average, because each loss is three times a win.
- D: 0.30 × 3.0 − 0.70 × 1.0 = 0.90 − 0.70 = +0.20R. Same expectancy as A from a very different shape, and a much longer losing run to sit through.
The last column is the win rate at which expectancy is exactly zero for that win and loss size: average loss ÷ (average win + average loss). Case A breaks even at 33.3%, so 40% clears it. A win rate on its own says nothing until you set it against that line.
Put your costs inside it
The table ignores spread, commission and swap. Real expectancy is lower: subtract the average cost of a trade, in R, from the result. Case B at an average cost of 0.10R is −0.10R, not zero. On a tight stop the same cost in pips is a bigger share of 1R, which is why a short-stop style needs a better gross number to end up in the same place as a wide-stop one.
What expectancy cannot tell you
- It is an average of what already happened. It describes the trades you measured, not the next one. Nothing in the formula says the next trades will look like the last.
- A small sample moves a lot. With a few dozen trades, one more loss or one more large win can change the sign. Treat a figure from 20 trades as a first look and keep recording.
- It hides the path. A and D above match to the hundredth and feel nothing alike. Pair it with the deepest losing run and the drawdown you lived through, not with a win rate alone.
- It depends on being consistent about what counts as 1R. If you move stops after entry, decide in advance whether R means the first stop or the last, and keep to it.
How to measure your own
- Record every trade, not only the ones you remember. The trades people forget are rarely a random sample.
- Write each result in R: result in money ÷ the money you risked at entry.
- Split wins from losses; take the average of each and the share of each.
- Apply the formula, then subtract your average cost per trade in R.
- Recompute on a fixed number of trades or a fixed period, and keep the two figures side by side.
A spreadsheet does this, and so does a journal that stores the result and the risk for each trade.
We're working on a free journal and a backtester, with no date yet. Today Trepeat is a trade copier for MT4, MT5 and cTrader, currently on demo accounts, and you can add notes, a grade and screenshots to any copied trade once it closes, with a calendar of your results.
The journal exports to Excel (.xlsx) and does not calculate expectancy today. The export carries each trade's P&L and your intended R:R, not the money you risked, so add that column to run the sum in R. A trade repeated onto several accounts shows as one entry with each follower account's leg inside it, so one decision is counted once. Details are in the journal documentation. The lot size calculator works out the size that makes 1R the amount you meant it to be, and the glossary defines the other terms used here. Journaling the reason for each trade next to its R makes the average easier to explain later.
Related: R-multiples, profit factor, win rate against risk-reward and the full list of metrics.
Written by the Trepeat team.