What is trading expectancy? Why win rate alone doesn't tell you much
By SendPay Business · · 2 min read
Trading expectancy is the average amount a record of trades made or lost per trade. It puts two things together that are often looked at separately: how often trades won, and how big the wins and losses were.
The formula
- Expectancy = (win rate × average win) − (loss rate × average loss).
- Example: a 45% win rate, average win of £300 and average loss of £150 gives 0.45 × 300 − 0.55 × 150 = £52.50 per trade.
- Multiply by the number of trades for a rough total over the record.
Win rate versus size of wins
A high win rate doesn't guarantee a profit if losses are large, and a low win rate can still make money if wins are big. The break-even win rate is average loss ÷ (average win + average loss); with the numbers above it is 33.3%, so a 45% win rate sits comfortably above it.
Profit factor
Profit factor is total money won divided by total money lost. Above 1 means wins outweighed losses; below 1 means the reverse. It is another way to read the same balance as expectancy.
The limits
Expectancy is a summary of past trades. It needs a big enough sample to mean much, leaves out fees and slippage unless they are built into the averages, and can change when markets change. It says nothing certain about the next trade.
Where SendPay fits
SendPay doesn't offer trading. SendPay platforms let your customers hold GBP, EUR and USD and exchange between them at a fee you set, alongside transfers and branded Visa cards, powered by licensed partners.
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Build my platform →Questions people ask
How do I work out expectancy?
Enter a win rate, average win and average loss into the free calculator.
Trading expectancy calculator →What is a good risk/reward ratio?
Work out a trade's reward-to-risk ratio and the win rate needed to break even.
Risk/reward ratio calculator →How big should a position be?
Size a position from account size and the risk per trade.
Position size calculator →Read next
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.