Define one unit of risk before comparing trades.
In a trading journal, R is a unit of planned risk. If the initial entry-to-stop risk was 100 USD, a gross profit of 200 USD is +2R and a gross loss of 100 USD is -1R. Expressing each trade relative to its own initial risk makes differently sized trades easier to compare. Keep the original risk recorded even if the stop is later moved.
Separate planned targets from realised results. A target at 2R does not make the average winner 2R if partial exits or early closes usually produce less. Use the actual average gross win and the absolute size of the average gross loss from a consistently recorded sample. The calculator uses a simplified model in which every trade is either a win or a loss; scratch trades need separate treatment.
Calculate the average result, then subtract costs.
Gross expectancy equals win probability multiplied by average win, minus loss probability multiplied by average loss. With a 40% win rate, 2R average winners and 1R average losers, the arithmetic is 0.40 × 2 - 0.60 × 1 = 0.20R per trade. These are illustrative inputs, not an estimate of any blockfunded strategy.
If average round-trip fees and adverse slippage total 0.10R per trade, net expectancy falls to 0.10R. At a fixed value of 100 USD for 1R, that is an arithmetic average of 10 USD per trade. It is not a promise about the next trade, the next ten trades or a monthly income. If your journal averages already include costs, enter zero additional costs to avoid subtracting them twice.
Use gross outcomes plus a separate cost estimate, or net outcomes with zero extra costs. Mixing both conventions makes the comparison misleading.
Find the break-even win rate after costs.
In this two-outcome model, the break-even win probability is (average loss + average costs) divided by (average win + average loss). With a 2R winner, 1R loser and 0.10R average cost, the required win rate is 1.10 ÷ 3 = 36.67%. Without costs, it would be 33.33%. Costs therefore change the threshold even when the planned stop and target are unchanged.
A result above 100% means the entered cost is larger than the average gross winner, so no achievable win rate can break even within those assumptions. The tool labels this case explicitly. Changing the formula inputs until an attractive answer appears is not evidence that a strategy has improved.
Check the sample and the path of losses.
An average hides both uncertainty and sequencing. Ten selected trades are different evidence from a complete journal covering changing conditions. Separate strategy versions, note missing trades, and compare an earlier sample with later results that were not used to tune the process. A positive historical average alone cannot establish that the same distribution will continue.
An evaluation also has loss boundaries. A sequence can cross a daily or maximum drawdown limit before later winners improve its average. Review expectancy alongside a losing-streak scenario and current drawdown room. The expectancy calculator does not estimate pass probability, maximum drawdown or reward eligibility.
- Audit the journal.Include losses and record the initial risk for every trade.
- Use realised averages.Keep target geometry separate from the actual size of winners and losers.
- Stress the assumptions.Try lower average wins and higher costs, then compare the loss sequence with available drawdown.
Calculate and review your assumptions
FAQ
Is a higher win rate always better?
No. The average payoff, average loss and costs determine expectancy together.
Does positive expectancy guarantee passing?
No. Sampling uncertainty, loss sequencing and account rules can still produce failure.
What if I have many break-even trades?
This calculator assumes only wins and losses. A journal with scratch trades needs a separate scratch probability and its costs.
Are these example returns forecasts?
No. They illustrate arithmetic using hypothetical inputs.