Glossary
Expectancy
The average amount you can expect to win or lose per trade over the long run.
Expectancy, explained
Expectancy is the single best summary of an edge. It blends win rate with average win and average loss: (win rate × average win) minus (loss rate × average loss). A positive expectancy means each trade, on average, adds to your account.
It is usually expressed in R, the multiple of risk. An expectancy of +0.3R means that across many trades you net about a third of your risk per trade — small per trade, powerful when compounded over hundreds. It turns a fuzzy sense of 'this works' into a number you can multiply by trade count.
Expectancy is only reliable over a large, consistent sample. A single trade tells you nothing about it; a few dozen tells you a little; several hundred taken the same way tell you whether the edge is real. Changing the rules mid-sample resets the count, which is why discipline and consistency are prerequisites for the number to mean anything.
Expectancy explains why discipline beats prediction. A modest positive expectancy executed consistently outperforms a brilliant strategy applied erratically, because the maths only works over a large sample of trades taken the same way. The edge lives in the repetition, not in any single brilliant call.
On the desk expectancy is the figure we ultimately care about. Win rate and risk-reward are inputs; expectancy is the output that says whether following the plan, trade after trade, grows the account — and it only pays off to those who take the whole sample, not a hand-picked few.
Frequently asked questions
- How do I calculate expectancy?
- Expectancy = (win rate × average win) − (loss rate × average loss). Expressed in R, a result like +0.35R means each trade adds about a third of your risk amount on average over a large sample.
- Why is expectancy better than win rate?
- Because it combines how often you win with how much you win and lose. Win rate ignores the size of wins and losses, so it can be high yet unprofitable. Expectancy captures the whole picture in one number.
Related terms
Win Rate
The percentage of trades that close in profit — meaningful only alongside risk-reward.
ReadRisk-Reward Ratio
How much you stand to make versus how much you risk on a trade — the core of long-term profitability.
ReadProfit Factor
Gross profit divided by gross loss — how many dollars you make for every dollar you lose.
ReadDrawdown
The peak-to-trough decline in your account — how far you fall from a high before making a new one.
Read
Put it into practice
Education modules
Free tools
More terms in the glossary.
Vocabulary is the easy part. See how the desk turns these concepts into structured trades with defined risk on every position.