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Use R to compare setups fairly. Use $ to plan account growth.
Expectancy in R
Use R expectancy to compare setups even when position size changes.
Percent of winning trades.
Average winning trade in R.
Enter as a positive number (absolute).
Example: “NQ RTH only” or “Setup A”.
Expectancy is edge per trade. Positive means edge; negative means you’re paying tuition.
Expectancy formula in trading + worked example
This is the “citable” block: definition, formula, and real numbers.
Where W is win rate, L = 1 − W is loss rate, AW is average win, and AL is average loss (absolute). Calculate in R to compare setups fairly.
Computation: (0.45 × 2.0) − (0.55 × 1.0) = 0.90 − 0.55 = +0.35R. That means your system averages +0.35R per trade over this sample.
Good vs bad expectancy benchmarks
Benchmarks depend on strategy and costs. Use these ranges as a starting point - then validate by setup and session.
| Expectancy (R) | Interpretation | Reality check |
|---|---|---|
| Below 0R | Negative edge. | Costs, risk drift, or a losing setup mix. |
| 0R to +0.10R | Thin edge. | Can disappear after commissions/slippage. |
| +0.10R to +0.30R | Decent (if stable). | Check stability by session + regime. |
| +0.30R+ | Strong (if repeatable). | Make sure it’s not one outlier trade. |
Expectancy vs profit factor vs win rate
These metrics answer different questions. Use them together during weekly review.
“How often do I win?” Useful, but can lie if average loss is bigger than average win.
“What is my edge per trade?” Best for keep/modify/cut decisions and comparing setups.
“How efficient are my wins vs losses?” Fast ratio that pairs well with expectancy. Calculate here: profit factor calculator.
Common expectancy mistakes
These are the reasons expectancy gets misunderstood in trading reviews.
If position size varies, $ expectancy becomes noisy. Use R expectancy to compare setups fairly.
Costs can turn thin expectancy negative. Track commissions/slippage and review net behavior.
A blended expectancy hides where edge actually exists. Compute expectancy by setup and by session.
One outlier win can inflate expectancy. Validate across enough trades and multiple weeks.
FAQ
Expectancy calculator trading
Use an expectancy calculator by entering win rate, average win, and average loss (absolute). It returns expected profit per trade. Prefer R expectancy when size changes, and segment by setup/session for real insights.
Expectancy in trading
Expectancy is the average edge per trade over time. Positive expectancy indicates edge; negative expectancy indicates the system loses money on average.
Expectancy formula in trading
Expectancy = (WinRate × AvgWin) − (LossRate × AvgLoss), where LossRate = 1 − WinRate and AvgLoss is absolute. Many traders compute expectancy in R so setups are comparable.
Profit factor vs expectancy
Profit factor compares total gross profits to total gross losses. Expectancy estimates edge per trade. Expectancy is better for decision-making and comparing setups; profit factor is a quick efficiency ratio. Use both during weekly review: profit factor calculator.