Are you still pursuing high win rates or high profit-loss ratios in trading? Many people, when trading, do not really think through what they are actually pursuing. Some stare at the win rate every day, believing that a win rate below 60% is unacceptable; others are obsessed with high profit-loss ratios, fantasizing that making 5 times or 10 times on one trade can solve all their problems. But the reality is often that the data looks good, yet the account does not stabilize in profit as a result.

A more common situation is that traders like to compare themselves with others. Seeing others flaunt their performance, showcase high win rates, and display significant profit-loss ratios, they begin to doubt their own methods and frequently change strategies. However, what you see are just result screenshots, and you cannot see the number of trades behind them, the maximum loss, and the consistency of execution, or even whether there is a survivor bias.

Now the question is: how do you determine whether your trading approach can actually make money?

Actually, it’s very simple: check whether your expected value (EV) is positive.

Calculating expected value isn’t complicated, as long as you first gather your trading method or historical profit and loss data. Here’s the most straightforward example: suppose your trading method’s payoff ratio is 1:2, and your win rate is 40%. That means when you win, you make 2 dollars; when you lose, you lose 1 dollar.

The way to calculate expected value is:

Profit per time × win rate − loss per time × probability of losing

Plugging in the data: 2 × 0.4 − 1 × 0.6 = 0.2

If the result is greater than 0, it means this is a positive-expected-value trading method. Mathematically, as long as you keep following the strategy through a sufficient number of trades, you can make money in the long run. But the hard part is keeping your technique and system unchanged. Some people learn patterns but don’t make money; then they see others trading moving averages, learn them, and still can’t make money. Then they look at some oddball method, and before they even see profits, they’ve already blown their entire principal while learning someone else’s approach. They take the long-term probability game and treat it like a short-term outcome. For example, if your win rate is ideally forty—does two consecutive failed trades automatically mean your trading system is a failure? It’s like saying you roll dice: if two times come up tails, won’t the next time definitely be tails too, or definitely heads? Then you go all-in and lose everything.

Many people keep spinning in place because they’ve never calculated their expected value. Instead, they let a streak of consecutive losses or an occasional big win control their emotions. They think “getting the trade right” means “every single trade is correct,” but they overlook the fact that trading is essentially a probability game.

A truly mature trader doesn’t focus on whether any single trade is a win or a loss. Instead, they focus on whether the method can be profitable in the long run—and whether they can consistently execute it. When you start judging trades with expected value rather than emotions, that’s when you’re truly on the side of a probability advantage.