Expectancy
The average dollar amount you expect to make per dollar risked, calculated from your win rate and average win/loss sizes.
Expectancy = (Win Rate × Avg Win) − (Loss Rate × Avg Loss)
Expectancy is the single most important number in a trader's statistics. It tells you whether your system makes or loses money on average per trade, and by how much.
A positive expectancy means the strategy is mathematically sound — grind the edge long enough and profit accumulates. A negative expectancy means no amount of discipline or money management saves the account in the long run.
Expectancy also reveals what to optimise: a low win rate with large wins can have higher expectancy than a high win rate with small wins.
On the desk
Win rate 40%, avg win $300, avg loss $150. Expectancy = (0.40 × $300) − (0.60 × $150) = $120 − $90 = $30 per trade. A positive edge — keep executing.