How to Calculate Expectancy

Two products and a subtraction

Expectancy is what one trade is worth on average, and it is made from the three numbers of the previous papers. Take the win rate times the average win: how often the list wins, times what a win pays. Take the loss rate times the average loss: how often it loses, times what a loss costs. Subtract the second from the first. On the ten-day list — one lot of the euro against the dollar bought at each day's open and sold at its close, 24 August to 4 September 2026 — that is 0.40 times $229.50, which is $91.80, minus 0.60 times $241.17, which is $144.70: minus $52.90 a trade.

The same number, the short way

There is a shorter route to the same number, and it shows what the number is. Add the ten results and the list ends $529 down; divide by the ten trades and each was worth minus $52.90 on average. The two products give the same answer because they are the same sum taken apart: the wins added up over ten, minus the losses added up over ten. The long way is worth knowing because it shows the four things behind the number, and which of them a change would have to move.

The per-trade number is the one to carry, because the count multiplies it. Minus $52.90 a trade, times ten trades, is the list. The same ten days at a tenth of a lot would be minus $5.29 a trade and minus $52.90 in all: the size scales the number, and the count multiplies it. Expectancy is what is left of a list when both the size and the count are taken out — a number per trade, in money, with a sign.

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