# Expectancy Math for Developing Traders

> Expectancy is the single most important math concept in trading. Learn what it is and how to calculate it using your journal.

**Tags:** expectancy, trading-math, statistics, beginners
**URL:** https://traderjournal.app/advanced-statistics/expectancy-math-for-developing-traders

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# Expectancy Math for Developing Traders

Many retail traders focus entirely on their win rate. They believe that a high win rate is the key to profitability. However, a trader with a 90% win rate can still lose money if their losses are massive, while a trader with a 35% win rate can be highly profitable if their wins are large.

The metric that determines long-term profitability is trading expectancy.

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## What is Expectancy?

Expectancy is the average amount of money you expect to make (or lose) per trade, after factoring in your win rate and average win/loss sizes.

The formula is:
`Expectancy = (Win Rate * Average Win Size) - (Loss Rate * Average Loss Size)`

For example, if your win rate is 40%, your average win is 500 dollars, and your average loss is 200 dollars:
`Expectancy = (0.40 * 500) - (0.60 * 200) = 200 - 120 = 80 dollars`

This means that over hundreds of trades, you can expect to make an average of 80 dollars per trade.

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## Why Expectancy Matters

As long as your expectancy is positive, your strategy will make money over a large sample of trades. This math helps you stay calm during normal losing streaks, knowing that the statistics will play out in your favor over time.

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## How to Find Your Expectancy

You cannot calculate expectancy without historical trade data. By logging all your trades in a journal, your average win, average loss, and win rate are tracked automatically, giving you your true expectancy.

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Trader Journal for MT4 and MT5 calculates your win rates and average wins/losses automatically, showing you your performance metrics in real time.

Download it today at android.traderjournal.app or ios.traderjournal.app.