How this number is made
Expectancy is the average dollars you make per trade if the next batch looks like the batch you typed. Profit factor is gross wins divided by gross losses. A profit factor above 1 made money. Neither number includes the trades you have not taken, and a few huge wins can carry the average.
- Count closed trades only.
- Average win and average loss are positive numbers. The page applies the minus sign to the losses.
Formula
Expectancy = win rate × average win − loss rate × average loss. Profit factor = (wins × average win) ÷ (losses × average loss).
Worked example
With the figures already in the form, average profit per trade is $42.50.
Questions
Is a high win rate enough?
No. A 70% win rate with tiny wins and rare huge losses can have a negative expectancy.
Where are commissions?
Take them out of the averages before you type, or the expectancy is high.