Expectancy
Definition
Expectancy is the average expected profit per trade, calculated as: (Win Rate x Average Win) - (Loss Rate x Average Loss). A positive expectancy means the system is profitable over a large sample of trades.
Expectancy is the single number that tells you whether your trading approach works. The formula is: Expectancy = (Win% x Avg Win) - (Loss% x Avg Loss). For example, with a 40% win rate, $2,000 average win, and $800 average loss: (0.40 x $2,000) - (0.60 x $800) = $800 - $480 = $320 per trade.
A positive expectancy doesn't guarantee every trade is profitable — it means that over many trades, you expect to come out ahead. The higher your expectancy relative to your average risk, the faster you'll hit profit targets and the more resilient you'll be against drawdowns.
For prop traders, expectancy must be high enough to reach the profit target within the allowed timeframe while absorbing the inevitable losing streaks. PropJournal calculates your expectancy in both dollar and R-multiple terms, broken down by strategy, instrument, and session, so you can focus on your highest-expectancy setups.
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