Expectancy — Your Average Dollar Per Trade

What is Expectancy?

Expectancy is the average dollar amount you can expect to make (or lose) per trade. It's calculated by weighting your average win and average loss by their probability of occurring.

Formula:

Expectancy = (Win Rate × Average Win) − (Loss Rate × Average Loss)

A Worked Example

• Win rate: 55%
• Loss rate: 45%
• Average win: $320
• Average loss: $180

Expectancy = (0.55 × $320) − (0.45 × $180)

= $176 − $81

= $95 per trade

This means: for every trade you take, you expect to make $95 on average.

Why Expectancy is Powerful

Expectancy connects probability to outcome in a single number. It answers the most important question a trader can ask: "Is it worth taking this trade?"

If your system has positive expectancy, taking more setups that fit your criteria will, over time, produce profit. If your expectancy is negative, taking more trades will only accelerate your losses.

Expectancy vs. Profit Factor

Both are useful but measure different things:

• Profit factor measures the ratio of winners to losers in dollar terms — it's a relative measure
• Expectancy measures the absolute average dollar per trade — it tells you the dollar value of your edge per trade

Use profit factor to evaluate system quality. Use expectancy to understand scale and position sizing.

R-Expectancy

An even more powerful version is R-Expectancy — measuring expectancy in units of R (your risk per trade) rather than dollars.

R-Expectancy = (Win Rate × Average Win in R) − (Loss Rate × Average Loss in R)

A system with R-expectancy of 0.5R means: on average, you make half your risk per trade. If you risk $200 per trade, you expect to make $100 per trade on average.

This normalizes expectancy across different position sizes, making it easier to compare performance over time even as your account grows.

Tradapt displays R-expectancy as Average R in the dashboard.