1. What Is Trade Expectancy?

Trade expectancy is a statistical measure that estimates the average amount a trader can expect to win or lose per trade. It combines win rate, average win size, and average loss size to provide a comprehensive view of trading performance.

2. How Does The Calculator Work?

The calculator uses the trade expectancy formula:

Where:

• \( Win\% \) — Percentage of winning trades
• \( AvgWin \) — Average profit from winning trades ($)
• \( Loss\% \) — Percentage of losing trades
• \( AvgLoss \) — Average loss from losing trades ($)

Explanation: This formula calculates the expected value per trade, helping traders understand their strategy's profitability over time.

3. Importance Of Trade Expectancy

Details: Trade expectancy is crucial for evaluating trading strategies, managing risk, and making informed decisions about position sizing and strategy adjustments.

4. Using The Calculator

Tips: Enter your historical trading data including win rate, average win amount, loss rate, and average loss amount. All values must be non-negative numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a good trade expectancy value?
A: A positive expectancy indicates a profitable strategy. The higher the value, the more profitable the strategy is expected to be over time.

Q2: How many trades should I use for calculation?
A: For accurate results, use data from at least 30-50 trades to establish reliable averages and percentages.

Q3: Can expectancy change over time?
A: Yes, as market conditions change and you refine your strategy, your trade expectancy may improve or deteriorate.

Q4: How does this relate to risk management?
A: Trade expectancy helps determine appropriate position sizing and risk per trade based on your strategy's historical performance.

Q5: Should I include commissions and fees?
A: Yes, for accurate results, your average win and loss amounts should be net of all trading costs including commissions and fees.