TradesMatrix Guide
How to Calculate Trading Expectancy
Trading expectancy estimates the average outcome per trade in a defined historical sample. Calculate it using consistent trade classifications and monetary units.
Formula
Expectancy = (Win Rate × Average Win) − (Loss Rate × Average Loss)
Enter win and loss rates as decimals that add to 1. Use average loss as a positive amount. Keep all outcomes in the same currency and use net figures if you want costs reflected.
Worked example
Suppose 55% of trades win an average of ₹200 and 45% lose an average of ₹150. Expectancy = (0.55 × ₹200) − (0.45 × ₹150) = ₹42.50 per trade for that sample. If costs are not included in the averages, the figure is before costs.
Steps to apply it
- Select a group of closed trades from one strategy and period.
- Calculate win rate, loss rate, average win, and average loss from that group.
- Apply the formula and state whether costs are included.
- Compare the estimate with drawdown and sample size; do not treat it as a forecast.
Educational information only, not investment or financial advice. Calculator outputs depend on the inputs and assumptions used; they do not predict results or remove trading risk.