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# Trading Expectancy: The Formula That Shows If You Have an Edge
- URL: https://www.flltlt.com/blog/trading-expectancy/
- Published: 2026-10-27T15:25:09.000Z
- Updated: 2026-10-27T17:39:41.000Z
- Description: How to calculate expectancy from win rate and average win and loss, why high win rates can still lose money and how many trades you need.
- Author: Fulltilt
- Tags: Trading Glossary, Risk Management

**The short answer:** Expectancy is the average amount a strategy makes or loses per trade over many trades. It's calculated as (win rate × average win) − (loss rate × average loss). A positive number means the strategy has made money on average; a negative number means it hasn't, no matter how good individual trades feel. It combines [risk-reward](https://www.flltlt.com/blog/risk-reward-ratio/) and win rate into one number.

## Key takeaways

- Expectancy = (win % × average win) − (loss % × average loss).
- It's an average over many trades, not a promise for the next one.
- A low win rate can still be profitable with large enough winners.
- You need a decent sample, at least 30 trades, before trusting it.
- Costs like commissions and slippage come off the top.

## How do you calculate expectancy?

![Expectancy formula: win percent times average win minus loss percent times average loss. Example: 40 percent times $300 minus 60 percent times $150 equals plus $30 per trade.](https://storage.ghost.io/c/a0/84/a0847890-aa24-4d5e-b6dd-8a7b42022bb3/content/images/2026/10/expectancy-formula.png)

In the example, the trader wins only 40% of the time but still averages +$30 per trade, because winners are twice the size of losers.

## How do win rate and size combine?

| Win rate | Avg win | Avg loss | Expectancy |
| -------- | ------- | -------- | ---------- |
| 40%      | $300    | $150     | +$30       |
| 60%      | $100    | $150     | $0         |
| 70%      | $100    | $300     | −$20       |
| 50%      | $200    | $150     | +$25       |

Notice the 70% win rate that loses money. A high win rate means nothing if the losses are much bigger than the wins, often because of a [stop that keeps getting moved](https://www.flltlt.com/blog/stop-loss-orders/).

## How many trades do you need?

**More than you'd like.** Ten trades can look amazing or terrible by luck alone. Track at least 30, and ideally 100, before deciding a strategy works. A [simulator](https://www.flltlt.com/blog/paper-trading-tradingview/) lets you build that sample without risking money.

## Why does expectancy matter in a prop firm?

**Because positive expectancy isn't enough if the swings are too big.** A strategy can average +$30 a trade and still hit a trailing drawdown during a normal losing streak if size is too large. Expectancy tells you the edge. [Risk per trade](https://www.flltlt.com/blog/how-much-to-risk-per-trade/) decides whether you survive long enough to collect it.

> **From the desk** Indy trades MNQ and publishes results in points on [Day Trader Income](https://www.daytraderincome.com/). A public record is really an expectancy record: every win and every loss, so the average is honest.

## The bottom line

Expectancy is the scoreboard for a strategy. Calculate it from real trades, give it a big enough sample, subtract costs, and size small enough to survive the swings while the average plays out.

## FAQ

### What is expectancy in trading?

Expectancy is the average profit or loss per trade over many trades, calculated as win rate times average win minus loss rate times average loss.

### What is a good expectancy?

Any positive expectancy after costs means the strategy has made money on average. The size matters relative to your risk per trade.

### Can a strategy with a low win rate be profitable?

Yes. With a 40% win rate, winners twice the size of losers produce positive expectancy.

### How many trades do I need to measure expectancy?

At least 30 trades, and ideally 100 or more, since small samples are heavily affected by luck.