Risk Lab
Experiment with R value, win rate, risk-reward ratio, and trading frequency to see how they affect your expected profit, loss, and drawdown.
Expected Value Over Time
Breakeven Risk-Reward
Being a profitable trader is purely a function of your win rate and risk-reward ratio. R value and number of trades don't factor in.
| Win Rate | Risk-Reward for Breakeven |
|---|---|
| 60% | 0.67 |
| 50% | 1.0 |
| 40% | 1.5 |
| 33% | 2.0 |
| 25% | 3.0 |
| 20% | 4.0 |
| 10% | 9.0 |
With a 50% win rate, you need at least a 1:1 risk-reward to break even. Ideally, target 2:1 or higher to be comfortably profitable.
Expected Value Table
Given your setup's historical probability and reward-to-risk ratio, see the expected profit after a given number of trades.
| Prob % | 1 trade | 2 trades | 3 trades | 5 trades | 10 trades | 20 trades | 50 trades |
|---|---|---|---|---|---|---|---|
| 25% | $-3 | $-5 | $-8 | $-13 | $-25 | $-50 | $-125 |
| 30% | $-1 | $-2 | $-3 | $-5 | $-10 | $-20 | $-50 |
| 35% | $1 | $1 | $2 | $3 | $5 | $10 | $25 |
| 40% | $2 | $4 | $6 | $10 | $20 | $40 | $100 |
| 45% | $4 | $7 | $11 | $18 | $35 | $70 | $175 |
| 50% | $5 | $10 | $15 | $25 | $50 | $100 | $250 |
| 55% | $7 | $13 | $20 | $33 | $65 | $130 | $325 |
| 60% | $8 | $16 | $24 | $40 | $80 | $160 | $400 |
| 65% | $10 | $19 | $29 | $48 | $95 | $190 | $475 |
| 70% | $11 | $22 | $33 | $55 | $110 | $220 | $550 |
| 75% | $13 | $25 | $38 | $63 | $125 | $250 | $625 |
Maximum Drawdown
Estimated maximum peak-to-trough loss over a series of trades. Useful for sizing positions and setting expectations.
| Prob % | 1 trade | 2 trades | 3 trades | 5 trades | 10 trades | 20 trades | 50 trades |
|---|---|---|---|---|---|---|---|
| 25% | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| 30% | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| 35% | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| 40% | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| 45% | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| 50% | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| 55% | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| 60% | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| 65% | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| 70% | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| 75% | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
Skill or Luck?
Assuming a 50/50 outcome for each trading day, here are the odds of achieving a consecutive winning streak:
| Win Streak | Probability |
|---|---|
| 1 | 50.0% |
| 2 | 25.0% |
| 3 | 12.5% |
| 4 | 6.3% |
| 5 | 3.1% |
| 6 | 1.6% |
| 7 | 0.78% |
| 8 | 0.39% |
| 9 | 0.20% |
| 10 | 0.098% |
| 11 | 0.049% |
| 12 | 0.024% |
| 13 | 0.012% |
| 14 | 0.006% |
| 15 | 0.003% |
| 16 | 0.002% |
| 17 | 0.0008% |
| 18 | 0.0004% |
| 19 | 0.0002% |
| 20 | 0.0001% |
Win streaks of 6-7+ days strongly suggest you've found your edge — that outcome is attributable to skill rather than luck.
A p-value below 5% is typically considered statistically significant, so targeting 5-day winning streaks is a solid initial challenge.
A six-sigma event (0.00034% probability) is achieved at a 19-day win streak. Beyond 20 days (0.0001% — less than 1 in 10,000), your trading is undoubtedly showcasing exceptional skill and consistency.