Risk vs. Reward Calculator API Documentation

Overview

The Risk vs. Reward Calculator API allows you to calculate the expected value of probabilistic scenarios. This is useful for decision-making, risk assessment, and financial analysis.

Formula: Expected Value = Σ(P(i) × Outcome(i))

Where P(i) is the probability of each scenario (expressed as a decimal between 0 and 1) and Outcome(i) is the corresponding outcome value.

Key Features

RESTful design with JSON input/output
CORS enabled for cross-origin requests
Support for up to 10 scenarios per calculation
Input validation with detailed error messages
Probability sum validation
Self-documenting API with info endpoint

Getting Started

Base URL

https://your-domain.com/api.php

Authentication

This API does not require authentication. All endpoints are publicly accessible.

Content Type

All requests and responses use JSON format. Include the following header in your requests:

Content-Type: application/json

Rate Limiting

Currently, there are no rate limits imposed on this API. However, please use it responsibly.

API Endpoints

POST Calculate Expected Value

POST /api.php?action=calculate

Description

Calculates the expected value based on multiple probability-outcome scenarios.

Request Body

Parameter	Type	Required	Description
scenarios	array	Required	Array of scenario objects (min: 1, max: 10)
scenarios[].probability	number	Required	Probability percentage (0-100)
scenarios[].outcome	number	Required	Outcome value (can be positive or negative)

Request Example

{
  "scenarios": [
    {
      "probability": 30,
      "outcome": 200
    },
    {
      "probability": 70,
      "outcome": 50
    }
  ]
}

Success Response (200 OK)

{
  "success": true,
  "data": {
    "expected_value": 95,
    "total_probability": 100,
    "scenarios_processed": 2,
    "warnings": []
  }
}

Response Fields

Field	Type	Description
success	boolean	Indicates if the request was successful
data.expected_value	number	Calculated expected value (rounded to 2 decimals)
data.total_probability	number	Sum of all probabilities (rounded to 2 decimals)
data.scenarios_processed	integer	Number of valid scenarios processed
data.warnings	array	Array of warning messages (if any)

Note: If the total probability is less than 100%, a warning will be included in the response indicating that some scenarios might be missing.

GET Get API Information

GET /api.php?action=info

Description

Returns comprehensive information about the API, including available endpoints, usage examples, and the formula used for calculations.

Request Parameters

None required.

Success Response (200 OK)

{
  "success": true,
  "data": {
    "api_name": "Risk vs. Reward Calculator API",
    "version": "1.0.0",
    "description": "Calculate expected value based on probability and outcome scenarios",
    "endpoints": [...],
    "formula": "Expected Value = Σ(P(i) × Outcome(i)) where P(i) is probability in decimal form"
  }
}

Error Handling

The API uses standard HTTP status codes to indicate the success or failure of requests.

HTTP Status Codes

Status Code	Meaning	Description
200	OK	Request succeeded
400	Bad Request	Invalid request parameters or data
405	Method Not Allowed	HTTP method not supported for this endpoint
500	Internal Server Error	Server encountered an unexpected error

Error Response Format

{
  "success": false,
  "error": "Error message describing what went wrong"
}

Common Error Scenarios

Invalid JSON

{
  "success": false,
  "error": "Invalid JSON input."
}

Missing Scenarios Array

{
  "success": false,
  "error": "Missing or invalid 'scenarios' array."
}

Probability Out of Range

{
  "success": false,
  "error": "Probability at index 0 must be between 0 and 100."
}

Total Probability Exceeds 100%

{
  "success": false,
  "error": "Total probability exceeds 100%. Please adjust your scenarios."
}

Wrong HTTP Method

{
  "success": false,
  "error": "Method not allowed. Use POST for calculate endpoint."
}

Usage Examples

Example 1: Investment Decision

Scenario: An investment has a 30% chance of doubling your money (from $100 to $200) and a 70% chance of losing half (leaving you with $50).

cURL Request

curl -X POST "https://your-domain.com/api.php?action=calculate" \
  -H "Content-Type: application/json" \
  -d '{
    "scenarios": [
      {"probability": 30, "outcome": 200},
      {"probability": 70, "outcome": 50}
    ]
  }'

JavaScript (Fetch API)

const response = await fetch('https://your-domain.com/api.php?action=calculate', {
  method: 'POST',
  headers: {
    'Content-Type': 'application/json'
  },
  body: JSON.stringify({
    scenarios: [
      { probability: 30, outcome: 200 },
      { probability: 70, outcome: 50 }
    ]
  })
});

const data = await response.json();
console.log(data);

Python (requests library)

import requests
import json

url = "https://your-domain.com/api.php?action=calculate"
payload = {
    "scenarios": [
        {"probability": 30, "outcome": 200},
        {"probability": 70, "outcome": 50}
    ]
}

response = requests.post(url, json=payload)
data = response.json()
print(data)

Response

{
  "success": true,
  "data": {
    "expected_value": 95,
    "total_probability": 100,
    "scenarios_processed": 2,
    "warnings": []
  }
}

Example 2: Product Launch Success

Scenario: A product launch has three possible outcomes based on market reception.

Request

{
  "scenarios": [
    {
      "probability": 20,
      "outcome": 500000
      // High success
    },
    {
      "probability": 50,
      "outcome": 150000
      // Moderate success
    },
    {
      "probability": 30,
      "outcome": -50000
      // Failure (loss)
    }
  ]
}

Response

{
  "success": true,
  "data": {
    "expected_value": 160000,
    "total_probability": 100,
    "scenarios_processed": 3,
    "warnings": []
  }
}

Example 3: Incomplete Scenarios (Warning)

Scenario: Only accounting for positive outcomes without considering all possibilities.

Request

{
  "scenarios": [
    {
      "probability": 40,
      "outcome": 1000
    },
    {
      "probability": 35,
      "outcome": 500
    }
  ]
}

Response with Warning

{
  "success": true,
  "data": {
    "expected_value": 575,
    "total_probability": 75,
    "scenarios_processed": 2,
    "warnings": [
      "Total probability is less than 100%. Some scenarios might be missing."
    ]
  }
}

Example 4: Getting API Information

cURL Request

curl -X GET "https://your-domain.com/api.php?action=info"

JavaScript (Fetch API)

const response = await fetch('https://your-domain.com/api.php?action=info');
const data = await response.json();
console.log(data);

Try It Out

Test the API directly from this page. Enter your API base URL and scenario details below.

API Configuration

API Base URL:

Scenarios

Scenario 1:

Probability (%): Outcome:

Scenario 2:

Probability (%): Outcome:

Scenario 3 (Optional):

Probability (%): Outcome:

Scenario 4 (Optional):

Probability (%): Outcome:

Scenario 5 (Optional):

Probability (%): Outcome:

Response:

Response will appear here...

Best Practices

Always validate probabilities: Ensure your probabilities sum to 100% for accurate results.
Handle warnings: Pay attention to warning messages in the response.
Use negative outcomes: For losses or costs, use negative values in the outcome field.
Round appropriately: The API returns values rounded to 2 decimal places. Consider further rounding based on your use case.
Error handling: Always check the 'success' field in responses and handle errors gracefully.
Scenario limit: Keep scenarios under 10 for optimal performance.
Zero probabilities: Scenarios with 0% probability are automatically skipped.
Test thoroughly: Use the interactive tester on this page before integrating into production.

Mathematical Background

Expected Value Formula

The expected value (EV) is calculated using the weighted average of all possible outcomes:

EV = Σ(P(i) × Outcome(i)) for i = 1 to n

Where:

EV = Expected Value
P(i) = Probability of scenario i (expressed as a decimal, e.g., 30% = 0.30)
Outcome(i) = The outcome value for scenario i
n = Total number of scenarios
Σ = Sum of all scenarios

Example Calculation

Given the following scenarios:

30% chance of outcome $200
70% chance of outcome $50

The calculation would be:

EV = (0.30 × 200) + (0.70 × 50)
   = 60 + 35
   = $95

This means that on average, over many repetitions, you would expect to receive $95.

Interpreting Results

Positive EV: Indicates a favorable decision on average
Negative EV: Indicates an unfavorable decision on average
Zero EV: Indicates a neutral decision (break-even)

Important: Expected value is a long-term average. Individual outcomes will vary, and the expected value does not guarantee specific results in any single instance.

Use Cases

Investment Analysis

Evaluate potential returns on investments by modeling different market scenarios and their probabilities.

Business Decisions

Assess strategic decisions like product launches, market expansions, or pricing strategies.

Project Planning

Estimate project outcomes considering various risk factors and success probabilities.

Risk Assessment

Quantify risks in insurance, safety planning, or compliance scenarios.

Gaming & Gambling

Calculate odds and expected returns in games of chance or betting scenarios.

Healthcare Decisions

Evaluate treatment options by weighing success rates against potential outcomes.

Integration Guide

Step 1: Set Up Your Environment

Ensure you have the API URL and can make HTTP requests from your application.

Step 2: Prepare Your Data

Structure your scenarios in the required JSON format with probability and outcome fields.

Step 3: Make the Request

Send a POST request to the calculate endpoint with your scenarios.

Step 4: Handle the Response

Check the 'success' field and extract the expected_value from the response data.

Step 5: Error Handling

Implement proper error handling for network issues, validation errors, and edge cases.

Sample Integration (JavaScript)

async function calculateRiskReward(scenarios) {
  try {
    const response = await fetch('https://your-domain.com/api.php?action=calculate', {
      method: 'POST',
      headers: {
        'Content-Type': 'application/json'
      },
      body: JSON.stringify({ scenarios })
    });

    if (!response.ok) {
      throw new Error(`HTTP error! status: ${response.status}`);
    }

    const result = await response.json();

    if (result.success) {
      console.log('Expected Value:', result.data.expected_value);
      
      if (result.data.warnings.length > 0) {
        console.warn('Warnings:', result.data.warnings);
      }
      
      return result.data;
    } else {
      console.error('API Error:', result.error);
      return null;
    }
  } catch (error) {
    console.error('Request failed:', error);
    return null;
  }
}

// Usage
const scenarios = [
  { probability: 30, outcome: 200 },
  { probability: 70, outcome: 50 }
];

calculateRiskReward(scenarios).then(data => {
  if (data) {
    console.log('Calculation complete!', data);
  }
});

Changelog

Version 1.0.0 (Current)

Initial release
POST /api.php?action=calculate endpoint
GET /api.php?action=info endpoint
Support for up to 10 scenarios
Probability validation (0-100%)
Total probability validation
JSON request/response format
CORS support
Comprehensive error handling

FAQ

Q: What happens if probabilities don't sum to 100%?

A: If the total is less than 100%, the calculation proceeds with a warning message. If the total exceeds 100%, an error is returned.

Q: Can I use negative outcome values?

A: Yes! Negative values are supported and useful for representing losses or costs.

Q: Is there a limit to the number of scenarios?

A: Yes, the API supports a minimum of 1 and a maximum of 10 scenarios per calculation.

Q: What precision is used for calculations?

A: All calculations are performed with full floating-point precision, but results are rounded to 2 decimal places in the response.

Q: Do I need authentication?

A: No, the API is currently open and does not require authentication.

Q: Can I use decimal probabilities?

A: Yes, the API accepts decimal values for probabilities (e.g., 33.33).

Q: What if a scenario has 0% probability?

A: Scenarios with 0% probability are automatically skipped and not included in the calculation.

Q: Is CORS enabled?

A: Yes, the API has CORS enabled and can be called from any domain.

Q: What programming languages can I use?

A: Any language that can make HTTP requests and parse JSON can use this API (JavaScript, Python, PHP, Java, C#, Ruby, etc.).

Q: How do I report bugs or request features?

A: Contact the API administrator or submit issues through your preferred channel.

Support & Contact

If you need assistance with the API or have questions not covered in this documentation:

Documentation Issues

If you find errors or unclear sections in this documentation, please report them.

Technical Support

For technical issues or integration help, contact your API administrator.

Feature Requests

Have an idea for improving the API? We'd love to hear your suggestions!