#Write2Earn #learn2earn #Binance 📘 Day 26 — Expectancy (The Formula Behind Profitable Trading)
Many traders focus on:
• Win rate
• Indicators
• Entry signals
But professionals focus on Expectancy.
Expectancy tells you if a strategy will make money over time.
🔹 What Is Expectancy?
Expectancy =
Average amount you expect to gain or lose per trade.
It combines:
• Win rate
• Risk-reward ratio
• Loss frequency
🔹 Simple Example
Suppose:
Win rate = 50%
Risk-Reward = 1:2
For every $10 risk:
Loss = −$10
Win = +$20
After 10 trades:
5 losses = −$50
5 wins = +$100
Net result = +$50
That is positive expectancy.
🔹 Negative Expectancy Example
Win rate = 70%
Risk-Reward = 1:0.5
You risk $10 to make $5.
Even with many wins,
a few losses can remove profits.
That system has weak expectancy.
🔹 Why This Matters
Expectancy helps you answer:
Is my strategy actually profitable?
Or am I just guessing?
🧠 Professional Rule
Before trading any strategy, know:
• Win rate
• Average risk-reward
• Expected profitability
If expectancy is positive,
consistent execution can grow capital.