Expectancy: why a 40% win rate can beat a 70% win rate

Win rate alone says little. Expectancy combines how often you win with how much you win and lose.

By AnkushAI Editorial, Education team · Oct 30, 2026 · 1 min read

A high win rate feels good. It does not by itself mean a strategy makes money. What matters is expectancy: the average result per trade over many trades.

The formula

Expectancy = (win rate × average win) − (loss rate × average loss)

Two example traders

These are illustrative numbers:

• Trader A wins 40% of the time. Average win $300, average loss $100. Expectancy = 0.40 × 300 − 0.60 × 100 = $60 per trade.
• Trader B wins 70% of the time. Average win $100, average loss $300. Expectancy = 0.70 × 100 − 0.30 × 300 = −$20 per trade.

Trader B is right more often and still loses money over time. One habit usually explains it: cutting winners early and letting losers run.

Related numbers worth tracking

• Profit factor: total gains divided by total losses. Above 1 means the system made money over the sample.
• Average win to average loss ratio: how big your winners are compared with your losers.
• Max drawdown: the largest peak-to-trough fall in your equity. It tells you what the strategy feels like to live through.

Sample size matters

Twenty trades can say almost anything. Expectancy becomes useful once you have a meaningful number of trades taken the same way. That is why a journal that records every trade, including the boring ones, is worth more than any single great trade.

You cannot control whether the next trade wins. You can control the size of your losses, and that is half of the formula.

Educational, not financial advice.

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