Definition. The average result of a single decision over a long series, taking into account the win rate and the average size of wins and losses.
How it works
Expectancy = (win rate × average win) − (loss rate × average loss). A method with a low win rate can have a positive expectancy if wins are clearly larger than losses, and vice versa.
Example
A 40% win rate, an average win of 100, an average loss of 50. Expectancy: 0.4 × 100 − 0.6 × 50 = +10 per decision.
What to watch out for
Expectancy is judged over a large number of decisions. A single trade or a short series says nothing about a method's quality.
You'll find the full explanation with graphics, examples and exercises in the 🧘 Trader's body and mind space, and its use in the live market in the 🔴 Live Room. Both are available to Club members (in Polish).
