Free trade-review tool

Trading expectancy calculator with costs

A high win rate and an attractive target ratio each tell only part of the story. Compare average winners, average losers and costs before deciding what a journal sample shows.

TradeStreamAI Editorial Team · Updated · Assumptions and corrections

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Quick answer

How do you calculate trading expectancy?

Multiply the win rate by the average win after costs, then subtract the loss rate times the average loss including costs. Use the same currency and consistent before-cost inputs throughout.

Model the payoff after costs

Defaults are invented examples. Enter positive average wins and losses before costs in USD, and one average round-trip cost paid on every trade. If your journal already includes costs, enter zero here to avoid counting them twice.

Average result per trade after costs

$15.00

Break-even win rate after costs

35.00%

Average result in loss units

0.150 R

Average win / average loss before costs

2.00 : 1

This is arithmetic using your assumptions, not an estimated probability, a backtest or a statistical confidence interval. R here means the entered average loss before costs; it may differ from initial planned risk in your journal.

Sensitivity to the assumed win rate

Same average payoffs and costs; only the hypothetical win rate changes. These rows are not forecasts.

Hypothetical expectancy at different win rates
Assumed winsNet per trade
30%-$15.00
40%$15.00
50%$45.00
60%$75.00

Deriving the break-even rate

Let p be the fraction of wins, W the average winning amount before costs, L the positive magnitude of an average loss, and C the average cost on every trade. Net expectancy is p × (W − C) − (1 − p) × (L + C). Setting this to zero gives p = (L + C) ÷ (W + L). Costs reduce winners and increase losses; they are not charged only to winners.

An original $200 / $100 example

Imagine gross average winners of $200, gross average losers of $100, $5 round-trip costs and 40% wins. The arithmetic is 0.40 × $195 − 0.60 × $105 = $15 per trade. Before costs it is $20. The break-even hurdle rises from 33.33% to 35%. These are invented payoffs, not TradeStreamAI results.

What a sample can hide

An average does not show loss sequences, drawdown, unequal trade sizes or an outlier that dominates the sample. Record every attempted setup, keep WAIT decisions separate from executed trades, and distinguish planned risk from realized loss. Do not convert this number into a monthly profit forecast.

Start with the journal examples, then use the evaluation guide to separate evidence quality from a confidence score.

Frequently asked questions

Questions about this free tool

What is the break-even win rate?

With average gross win W, gross loss L and a constant round-trip cost C on every trade, break-even win rate is (L + C) / (W + L). It can exceed 100% if costs exceed the winning payoff.

Does positive calculated expectancy prove a strategy works?

No. An assumption or a selected sample can be misleading. Market conditions, execution and payoffs change; the tool does not measure uncertainty, independence or out-of-sample performance.

Should I use target reward-to-risk or journal outcomes?

Use realized averages from a complete journal sample to describe that sample. A planned target ratio is only a scenario input because early exits, partial fills and stop slippage change realized payoffs.

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