Expectancy

Glossary · Quant & Stats

Expectancy is the average amount a strategy earns or loses per trade: (win rate × average win) minus (loss rate × average loss). Positive expectancy means the edge is real across many trades; negative expectancy means fees and losers grind the account down regardless of how good individual trades feel.

"It's the only number that says whether your system prints or bleeds — everything else is decoration."

Worked example: 40% win rate, average winner 2R, average loser 1R gives (0.4 × 2) − (0.6 × 1) = +0.2R per trade. Risking 1% per trade over 100 trades, that's roughly +20% before costs — and costs matter, because taker fees plus funding on perps can shave 0.05-0.1R per trade, enough to flip a thin edge negative. Multiply expectancy by trade frequency to see what a system actually pays per month.

The misread that costs money is judging expectancy on ten trades. A genuinely positive system still serves up five- and six-trade losing streaks on schedule — which is precisely when traders abandon it, usually right before it pays — while a hot streak on a negative-expectancy system convinces them to double size. Log every trade, compute the number on 50-100 of them, and re-check quarterly, because edges decay as the crowd finds them. Feelings vote every trade; expectancy votes once, at the end.

Closed calls, and how far each one moved

Related jargon

Questions

What is Expectancy in crypto trading?

Expectancy is the average amount a strategy earns or loses per trade: (win rate × average win) minus (loss rate × average loss). Positive expectancy means the edge is real across many trades; negative expectancy means fees and losers grind the account down regardless of how good individual trades feel.

How would a trader say it?

It's the only number that says whether your system prints or bleeds — everything else is decoration.

Part of the Crypto Jargon glossary — every term, decoded the way a trader would say it.

Crypto Jargon

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