TradeBud

TRADING PERFORMANCE GLOSSARY

Trading expectancy

Trading expectancy estimates the average outcome per trade across a defined sample. A positive historical expectancy means the entered sample produced a positive average result; it is descriptive, not a guarantee about the next trade.

Updated August 31, 2026 · Educational information only

THE FORMULA

Expectancy = (win probability × average win) − (loss probability × average loss)

Use the exact convention shown when comparing samples.

WORKED EXAMPLE

See the calculation.

If 18 of 40 trades win at $180 on average and 22 lose $100 on average, expectancy is (18/40 × 180) − (22/40 × 100) = $26 per trade.

HOW TO INTERPRET IT

Ask what the number leaves out.

  • Use the same unit for average wins and losses, such as dollars, percentage points, or R.
  • Keep breakeven trades in the total-trade denominator when that is how your journal defines win rate.
  • Review sample size, outcome distribution, fees, and setup consistency alongside the average.

COMMON MISTAKES

Keep comparisons honest.

  • Mixing gross and net outcomes.
  • Treating expectancy from a handful of trades as stable evidence.
  • Assuming positive historical expectancy predicts a future return.