Risk & performance
Expectancy
Also known as: edge, expected value
Expectancy is the average amount you can expect to win or lose per trade over many trades, given your win rate and risk-reward.
Positive expectancy means a strategy makes money on average; negative means it loses. It is the mathematical core of any edge: expectancy = (win rate × average win) − (loss rate × average loss). Backtesting estimates expectancy from historical trades.
Related terms
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