Probability of Profit Calculator

Formula

The formula to calculate the Probability of Profit (PoP) is:

\[ \text{PoP} = \frac{\text{ML}}{\text{SW}} \times 100 \]

Where:

$\text{PoP}$ is the Probability of Profit (%)
$\text{ML}$ is the maximum loss ($)
$\text{SW}$ is the spread width ($)

What is the Probability of Profit?

The Probability of Profit (PoP) is a metric used to assess the likelihood of achieving a profit in a trading strategy or investment. It is calculated by dividing the maximum potential loss by the spread width and multiplying by 100 to get a percentage. This calculation helps traders and investors understand their risk and make more informed decisions.

Example Calculation

Let's assume the following values:

Maximum Loss (ML) = $50
Spread Width (SW) = $200

Using the formula:

\[ \text{PoP} = \frac{50}{200} \times 100 = 25\% \]

The Probability of Profit (PoP) is 25%.