August 6, 2026 · 5 min
Trading expectancy: the only number that says whether your method works
A 70% win rate can lose money. A 35% win rate can make money. Expectancy settles it in one line of math.
Traders love their win rate. It flatters, it's easy to remember, it's easy to share. But it doesn't answer the only question that matters: does your method make money over time? For that, you need expectancy.
The formula
Expectancy = (win rate × average win) − (loss rate × average loss).
It's what you make, on average, per trade. Positive, your method has an edge. Negative, every extra trade brings you closer to zero.
Two traders, two surprises
Trader A wins 70% of the time. Average win 50, average loss 150. Expectancy = 0.70 × 50 − 0.30 × 150 = 35 − 45 = −10 per trade.
Trader B wins 35% of the time. Average win 300, average loss 100. Expectancy = 0.35 × 300 − 0.65 × 100 = 105 − 65 = +40 per trade.
Trader A feels like they trade well: they win almost three times out of four. Yet they lose money, slowly and surely.
Why expectancy degrades
A method with positive expectancy can turn negative because of a handful of off-plan trades. Three revenge trades at −300 wipe out a week of disciplined trading. The expectancy of your method and that of the way you trade it are two different numbers.
The right question
Don't just ask "what is my expectancy?". Ask "what would it be if I had only taken trades that followed my plan?". The gap between the two is the price of your lack of discipline.
TradeDiscipline computes both numbers from your journal: your real result and the one you would have had by following your rules. Calculate your gap for free.
Turn theory into practice
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