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Expectancy: meaning in forex and gold trading

Expectancy is the average amount a trading method wins or loses per trade, combining win rate and the size of wins and losses.

Last updated: · By Forexuro Desk · Editorial policy

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Definition

Expectancy: Expectancy is the average amount a trading method wins or loses per trade, combining win rate and the size of wins and losses.

The formula

Expectancy = (win rate × average win) − (loss rate × average loss). In R terms, with the loss set to 1R: E = W × average win in R − (1 − W). A positive number means the method has made money on average over the sample; a negative one means it has lost.

Why it beats win rate alone

A 70% win rate with small wins and large losses can lose money, and a 35% win rate with large wins can make money. Expectancy captures both. Include costs and use a large enough sample: a few dozen trades says little.

Worked example

Over 100 trades you won 45 with an average of 1.8R and lost 55 at 1R. E = 0.45 × 1.8 − 0.55 × 1 = +0.26R per trade. Risking £40 per trade, that averaged about £10.40 per trade before costs. Past results do not guarantee future ones.

Common mistakes

  • Judging a method on a small sample.
  • Ignoring spreads, commission and swaps.

If you follow trade signals, for example the gold signals or EUR/USD signals, understanding this term helps you size and manage each trade yourself. The free Forexuro Telegram channel shares daily market updates where these ideas are used in practice.

Win rate

Win rate is the percentage of closed trades that made a profit.

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Risk to reward ratio

The risk to reward ratio compares the distance to the stop loss with the distance to the take profit, such as ...

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Risk of ruin

Risk of ruin is the probability that a run of losses will shrink an account to a level where you cannot contin...

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Drawdown

Drawdown is the fall in account value from a peak to a later low, usually shown as a percentage.

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Tools and guides

Frequently asked questions

What is a good expectancy?

Any positive figure after costs on a large sample, but consistency and drawdown matter too.

Can I calculate expectancy from a signal provider's history?

Yes, if every trade is published. Forexuro publishes its full trade history.

Education only, not financial advice. Trading forex, gold and CFDs carries a high risk of losing money, and leverage magnifies both gains and losses. Past performance is not a reliable guide to future results. Read our risk disclosure.