expectancy

🧮 Expectancy: a strategy’s real report card. Formula: E = (Win% × Avg Win) − (Loss% × Avg Loss)

3 profiles in the chart (illustration):
1️⃣ Strategy A: 70% win rate, 1:1 R:R → E = 0.7(1) − 0.3(1) = +0.40R
2️⃣ Strategy B: 40% win rate, 1:3 R:R → E = 0.4(3) − 0.6(1) = +0.60R
3️⃣ Strategy C: 80% win rate, but each loss is 4x → E = 0.8(1) − 0.2(4) = 0.00R

Look at C: 80% win rate, yet profit is ZERO. B: 40% win rate, yet it’s the best.

R = 1 unit of risk — thinking in multiples makes strategies comparable. Win rate is the “feels good” metric; expectancy is the “is good” metric. 🎯

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