Analysis

Expectancy

The average profit or loss, in R, that a strategy produces per trade.

Expectancy is calculated as (win rate × average win in R) − (loss rate × average loss in R). A system winning 40% of trades with +2.5R winners and −1R losers has an expectancy of +0.4R per trade.

Positive expectancy is the definition of an edge, and it makes win rate almost irrelevant on its own: a 75% win rate with −3R losers and +0.5R winners is a losing system that feels excellent. Expectancy should be computed per setup, since one setup typically carries the result.

Được giảng dạy trong các bài học này

The trading journal — Strategy & The Journal
Expectancy & R multiples — Strategy & The Journal
Process versus outcome — Psychology & Longevity
Patience & the discipline of doing nothing — Psychology & Longevity
Building a routine that lasts — Psychology & Longevity

Các thuật ngữ liên quan

R multipleA trade's result expressed as a multiple of the amount risked.Analysis BacktestingApplying written rules to historical data to estimate how they performed.Analysis Win rateThe percentage of trades that close profitably.Analysis

Xem thêm trong Analysis

ATR (average true range)Backtesting Bollinger Bands Breakout Candlestick Chart pattern Confluence Divergence