What is Expectancy in trading?
Updated June 2026 · 7 min read
Most traders focus on win rate. "What percentage of my trades win?" But win rate alone tells you nothing. A trader with a 70% win rate can be losing money. A trader with a 35% win rate can be getting rich. The statistic that truly matters is expectancy.
Expectancy is the expected return per dollar of risk across a large number of trades. It is the only way to know whether your strategy is structurally profitable — or whether you have just been lucky.
Expectancy in one formula
Expectancy = (Win Rate × Avg. Win) − (Loss Rate × Avg. Loss)
A positive expectancy means your strategy is profitable over a large number of trades. A negative expectancy means you will certainly lose in the long run — no matter how good a particular week felt.
How do you calculate expectancy?
Suppose you have the following statistics over the last 100 trades:
This means you earn an average of $35 per trade, regardless of the outcome of any individual trade. Over 100 trades this system generates $3,500 — even though you lose 55 of those 100 trades.
Expectancy per unit of risk (R-multiple)
An even more useful version of expectancy is the R-multiple: expectancy expressed as a multiple of the risk per trade (R). This makes it possible to compare strategies with different risk sizes.
An expectancy of +0.35R is healthy. Anything above +0.2R is a working strategy. Anything below 0 is losing money in the long run.
Why win rate is misleading
Many beginner traders chase a high win rate. But a high win rate means nothing without the context of average win and average loss:
Example A: 70% win rate, negative expectancy
Win rate 70%, avg. win $50, avg. loss $200. Expectancy = (0.70 × 50) − (0.30 × 200) = 35 − 60 = −$25 per trade. Losing money despite a high win rate.
Example B: 35% win rate, positive expectancy
Win rate 35%, avg. win $300, avg. loss $100. Expectancy = (0.35 × 300) − (0.65 × 100) = 105 − 65 = +$40 per trade. Profitable despite a low win rate.
How do you improve expectancy?
There are three levers:
Lever 1: Increase win rate
Sharpen your entry criteria so you only take the highest-quality setups. Fewer trades, better quality. This increases your win rate without shrinking your RR.
Lever 2: Improve risk-reward
Let winners run longer (trail your stop, use multiple targets), and cut losers on time (hold your stop, no moving it). This increases your average win or reduces your average loss — both improve expectancy.
Lever 3: Eliminate off-plan trades
Trades outside your plan almost always have negative expectancy. By only taking trades that meet all your criteria, you automatically remove the biggest losers from your statistics.
How many trades do you need for reliable expectancy?
Expectancy based on 10 or 20 trades is nearly worthless — the sample size is too small. Rule of thumb: you need at least 100 trades for a reliable indication, preferably 200–300.
This is also why it is so dangerous to adjust your strategy after a short losing streak. Based on 15 trades you cannot draw any conclusions about your expectancy.
Calculate your expectancy automatically
Logify calculates your expectancy, R-multiple, and win rate automatically based on your logged trades. See at a glance whether your strategy has a positive edge — and where you are leaking.
Try Logify free →Conclusion
Expectancy is the most honest measure of your trading strategy. It combines win rate and risk-reward into a single number that tells you whether your system is profitable over a large number of trades. Calculate it, improve it, and use it as your anchor for making decisions — not gut feeling, not a short losing streak.
Frequently asked questions
What is a good expectancy?
Anything above 0 is technically profitable. In practice you want at least +0.2R to compensate for transaction costs and slippage. Professional traders aim for +0.3R to +0.6R per trade.
Does expectancy vary by market condition?
Yes — most strategies perform better in certain market conditions (trending vs. ranging). By tracking expectancy per market type, you can deploy your strategy only when conditions are favorable.
Can costs make expectancy negative?
Absolutely. Spread and commission eat into your profits on small targets. If your risk is $100 and your target is $120, but the spread is $15 per trade, your effective win drops to $105. This can turn a marginally positive strategy into a losing one.