GLOSSARY · STATISTICS
What is expectancy?
Expectancy is the average amount a strategy is expected to win or lose per trade, calculated from win rate, average win and average loss.
What it means
The formula is (win rate × average win) minus (loss rate × average loss). Expressed in R multiples it becomes portable across account sizes: an expectancy of 0.15R means each trade is worth 0.15 times the amount risked, on average.
Why it matters
This is the number that determines whether a system is worth running, and it combines the two figures that are meaningless separately. A 35% win rate with 3:1 payoff gives 0.4R; a 60% win rate with 0.5:1 payoff gives −0.1R, and that second system loses money while winning most of its trades.
What this changes in practice
Costs must be inside the calculation, not added afterwards. On short-target gold strategies spread and commission routinely consume a double-digit share of the gross move, which is enough to move a marginal expectancy below zero — the profit calculator shows that share for a specific trade.
Why even a profitable record can be luck, and how often it is, is worked out in is forex trading profitable?
Related terms
- Win rateWin rate is the percentage of trades that close profitably, and on its own it says nothing usefu…
- Profit factorProfit factor is gross profit divided by gross loss, so a value above 1.0 means a strategy made …
- R multipleAn R multiple expresses a trade's result as a multiple of the amount risked, so a trade that gai…
- CommissionCommission is a per-lot fee charged by the broker for executing a trade, typically on raw-spread…
- Kelly criterionThe Kelly criterion is a formula giving the position size that maximises long-run growth rate fo…
- Profit targetA profit target is the gain you must make in a prop firm evaluation to pass it, usually 8% to 10…
- Risk-reward ratioThe risk-reward ratio compares the distance to a trade's take profit against the distance to its…
Further reading
Educational information only, not financial advice. Trading leveraged products carries substantial risk of loss. Last updated 2026-09-09.