Trading expectancy

Trading expectancy is the average amount you can expect to win or lose on each trade, over a large number of trades. It's the single number that tells you whether a strategy actually makes money — regardless of how often it wins.

The formula

Expectancy = (Win rate × Average win) − (Loss rate × Average loss).

Example: a 40% win rate with a $300 average win and a $150 average loss gives (0.40 × 300) − (0.60 × 150) = 120 − 90 = +$30 per trade. Positive expectancy means the system is profitable on average; negative means it bleeds no matter how disciplined you are with everything else.

Why it beats win rate

Win rate on its own is meaningless. A 40% win rate with wins twice the size of losses is strongly profitable; a 70% win rate with tiny wins and huge losses is a slow blow-up. Expectancy combines how often you win with how much — which is why it's the metric that matters.

How many trades before you trust it

A rough guide is 30+ trades for a first read and 100+ before acting on it — more if your results are highly variable. A single point estimate from 20 trades can look great by luck. Shibiki computes your expectancy live with a Wilson confidence interval, so you know whether your edge is real or just a small-sample streak — and it stops you doubting a good system after a normal losing run.

Try it: expectancy calculator · Related: R-multiple