What is trading expectancy?
Expectancy is the average result your strategy should produce per trade over a large sample. A strategy with positive expectancy can make money even with a lower win rate if the average winner is larger than the average loser.
Expectancy formula
Expectancy = (Win Rate × Average Win) − (Loss Rate × Average Loss)
Use R-multiples for cleaner analysis: average win in R, average loss in R, and expectancy becomes expected R per trade. ProfitPnL tracks this automatically from your journaled trade history.
FAQs
Is expectancy more important than win rate?
Yes. Win rate alone can be misleading. A 40% win rate can be profitable with large winners, while a 70% win rate can lose money if losses are too large.
Should I use dollars or R?
Both work if you stay consistent, but R-multiples make strategies easier to compare because they normalize each trade by planned risk.