Expectancy combines how often you win with how much you win and lose. A positive expectancy means the strategy makes money over a large number of trades; a negative one means it loses, however you size it. Measured in R, it does not depend on account size, so you can compare setups and markets directly.
Example
Over 100 trades you won 40 with an average of +2.2R and lost 60 with an average of −1R. Expectancy = 0.40 × 2.2 − 0.60 × 1 = 0.88 − 0.60 = +0.28R per trade. Risking 1% per trade, that is roughly +28% over 100 trades before compounding and fees.
Why it matters
Expectancy is the clearest single number for whether you have an edge. It shows why a 40% win rate can be profitable and a 70% win rate can lose money. Tracked per setup, it tells you which setups to trade more and which to drop.
Common mistake
Calculating expectancy from 15 or 20 trades and treating it as fact. Small samples swing widely. Wait for at least 50 to 100 trades of the same setup before drawing conclusions, and keep updating the number as trades come in.
Put it into practice
- Free toolExpectancy & R-multiple calculatorTurn your win rate and average win and loss into expectancy per trade, the break-even win rate and profit factor. Plus the R-multiple of any single trade.
- In FlowsenseAnalyticsWin rate, expectancy, profit factor and drawdown from your own trades, broken down by setup, session and hold time.
FAQ
- What is a good expectancy?
- Anything consistently positive after fees. Many discretionary traders see +0.1R to +0.4R per trade; the higher it is, the fewer trades it takes for the edge to show.
- How is expectancy different from profit factor?
- Expectancy is the average result per trade. Profit factor is total profit divided by total loss. Both use the same trades, but expectancy tells you what each trade is worth on average.
- Can I have a high win rate and a negative expectancy?
- Yes. Winning 80% of trades at +0.2R and losing 20% at −1.5R gives 0.16 − 0.30 = −0.14R per trade.