What expectancy means
Expectancy = (Win rate × Average win) − (Loss rate × Average loss)
It is the average amount each trade adds to (or takes from) your account over many trades. A 45% win rate sounds poor, but with $300 average wins and $200 average losses the expectancy is +$25 per trade. A 70% win rate with $100 wins and $300 losses loses $20 per trade.
Profit factor and break-even win rate
Profit factor is gross profit divided by gross loss; above 1.0 is profitable. The break-even win rate is the win rate at which your current average win and loss produce zero — avg loss ÷ (avg win + avg loss). If your actual win rate is comfortably above it, you have an edge on paper.
Measure it per setup
Your overall expectancy hides the setups that make money and the ones that bleed it. Tracking expectancy by setup, time of day and instrument is exactly what a trading journal is for.
FAQ
What is a good trading expectancy?
Anything reliably above zero after commissions, measured over a large sample. Expressed in R, +0.1R to +0.3R per trade is common for profitable day traders.
What is a good profit factor?
Above 1.0 is profitable; 1.5–2.0 is strong for most discretionary strategies. Very high numbers on small samples are usually luck.
How many trades do I need?
At least 30–50 to start trusting the numbers, and more for strategies with large, rare winners.