Community Forex Questions
What is win rate versus expectancy?
Win rate and expectancy are two core performance metrics in trading, but they measure very different things. Understanding the difference helps traders avoid misleading conclusions about strategy quality.
Win rate refers to the percentage of trades that close in profit. If a trader wins 6 out of 10 trades, the win rate is 60 percent. While this number feels reassuring, it does not account for the size of wins and losses. A strategy can have a high win rate but still lose money if losses are large and gains are small. Many short-term strategies fall into this trap by aiming for frequent small profits while risking larger losses.
Expectancy, on the other hand, measures the average amount a trader can expect to gain or lose per trade over time. It combines win rate, average win size, and average loss size into one figure. A simplified way to view expectancy is how much a strategy earns for every trade taken. Even a strategy with a low win rate can be profitable if winning trades are significantly larger than losing ones.
The key difference is that the win rate focuses only on frequency, while the expectancy focuses on profitability. Professional traders prioritise expectancy because it reflects long-term performance, not emotional comfort. A 40 percent win rate strategy with strong risk-to-reward can outperform a 70 percent win rate strategy with poor trade management. Sustainable trading success depends on positive expectancy, not just winning often.
Win rate refers to the percentage of trades that close in profit. If a trader wins 6 out of 10 trades, the win rate is 60 percent. While this number feels reassuring, it does not account for the size of wins and losses. A strategy can have a high win rate but still lose money if losses are large and gains are small. Many short-term strategies fall into this trap by aiming for frequent small profits while risking larger losses.
Expectancy, on the other hand, measures the average amount a trader can expect to gain or lose per trade over time. It combines win rate, average win size, and average loss size into one figure. A simplified way to view expectancy is how much a strategy earns for every trade taken. Even a strategy with a low win rate can be profitable if winning trades are significantly larger than losing ones.
The key difference is that the win rate focuses only on frequency, while the expectancy focuses on profitability. Professional traders prioritise expectancy because it reflects long-term performance, not emotional comfort. A 40 percent win rate strategy with strong risk-to-reward can outperform a 70 percent win rate strategy with poor trade management. Sustainable trading success depends on positive expectancy, not just winning often.
Win rate and expectancy measure performance in different ways. Win rate shows how often a trader wins, expressed as a percentage of profitable trades. A high win rate can look attractive, but it does not reveal how much is gained or lost per trade. Expectancy goes deeper by combining win rate with average profit and average loss. It shows how much a strategy is expected to earn or lose per trade over time. A system can have a low win rate but strong expectancy if wins are much larger than losses. This makes expectancy a more reliable measure of long-term trading success.
Jan 05, 2026 03:05