Glossary › expectancy

Trading glossary · advanced

expectancy

How much you win or lose on an average trade when you add everything up over many trades.

The fuller meaning

The average result per trade: (win rate × average win) − (loss rate × average loss), usually in R. Winning 40% at 2R and losing 60% at 1R gives +0.2R per trade before costs. It only means something over many trades, and only a number that stays positive after costs is worth trading.

expectancy.

Related words

at the money · backtest · backwardation · basis · call option · contango · data snooping · delta · edge · entry trigger