Glossary
Expectancy
Expectancy is the average amount you can expect to make or lose per trade, combining win rate and average win/loss size: (win rate × average win) − (loss rate × average loss). Positive expectancy means the system makes money over many trades even though individual results vary. It is the single number that says whether an edge exists.
Expectancy reframes trading from "was this trade right?" to "does this process profit over hundreds of repetitions?" — which is the only question that matters statistically.
Expectancy is often expressed in R-multiples (risk units) instead of currency, making it comparable across account sizes and position-sizing schemes. An expectancy of 0.3R means the average trade earns 30% of the amount risked.
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