Expected value & thinking in bets
See that a genuinely profitable process still produces long losing runs — so a drawdown stops feeling like evidence that the method is broken.
Runs entirely in your browserRuns entirely on your device — nothing you type is sent anywhere. Educational only, and not investment advice.
How to use this calculator
Each step names a control you will find on screen above.
- Chance you are right
Your hit rate. Set it honestly; the whole point is what happens at a realistic figure, not a flattering one.
- Gain when right and Loss when wrong
The payoffs. A low hit rate is perfectly fine if the wins are large enough, and this is where you can see exactly how large.
- Number of decisions
Run a hundred. Then run it again — the sequence changes every time even though the process does not.
- Read the cumulative outcome
Watch the worst drawdown inside a run that ends profitably. That drawdown is the real test of whether you can actually follow this method.
Worked example: A profitable system that loses eight in a row
You are right 40% of the time. Wins make ₹3,000, losses cost ₹1,000. Run a hundred trades.
What to enter
- Chance you are right
- 40%
- Gain when right
- ₹3,000
- Loss when wrong
- ₹1,000
- Number of decisions
- 100
What it shows you
- Expectancy per trade
- +₹600
- Expected over 100
- +₹60,000
- Chance of 8 losses in a row
- near-certain somewhere in 100
- That drawdown
- −₹8,000
- Runs ending in profit
- The large majority
(0.4 × 3,000) − (0.6 × 1,000)
Where this is taught
A calculator gives you a number. These explain what the number means and when it misleads you.
- Risk & Psychology11 minAfter a long run of being rightA losing streak makes people cautious, which is protective. A winning streak makes them certain, which is not — and nobody looks for the problem while it is working.
- Fundamental Analysis10 minChecklist investingSurgeons and pilots use checklists because expertise fails under pressure. Building one for investing, and using it honestly.
- Technical Analysis12 minCutting false signals without cutting the good onesEvery filter that removes bad trades removes some good ones too. How to measure that trade-off instead of guessing at it.
- Risk & Psychology12 minHow long before you know if you are any good?Markets give feedback that is delayed, noisy and often misleading. The sample size required to distinguish skill from luck is far larger than anyone expects.
- Technical Analysis11 minPaper trading properly, and what it cannot tell youForward testing catches things a backtest never will, and it lies about the one thing that decides most outcomes.