Mason Henry_ Young

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What is expectancy in trading systems?

Expectancy = (Win% × Avg Win) – (Loss% × Avg Loss). Example: a 50% system with 2:1 reward/risk has positive expectancy: (0.5×2) – (0.5×1) = +0.5R per trade. Expectancy shows the average expected outcome per trade, the core of profitability. Institutions design strategies to maximize expectancy while minimizing volatility. Retail traders often ignore it, focusing on win rate alone. A system with 30% win rate but 3:1 reward/risk can outperform a 70% system with poor ratios. Tracking expectancy through journals ensures traders focus on the process, not random outcomes. Expectancy is the math behind consistency, the antidote to emotional trading.