What is expectancy in trading?

It is the average amount you expect to make per trade: win rate times average win minus loss rate times average loss. A positive number means the strategy made money on average in your sample.

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Trading Journal Metrics That Matter: Expectancy, R Multiple and Profit Factor

Which trading journal numbers actually tell you something: win rate with average win and loss, expectancy, R multiples, profit factor and plan adherence.

Win rate alone is not enough

A 70% win rate can lose money if the average loss is much larger than the average win, and a 35% win rate can be very profitable if winners are large. A journal should show win rate together with the average win and average loss, and the cleanest way to combine them is expectancy.

R multiples

An R multiple expresses a trade result in units of the risk you took. If you risked $100 and made $250, the trade is +2.5R. If you lost $100, it is -1R. Using R lets you compare trades of different sizes and markets and see how well you follow your risk rules.

Expectancy

Expectancy is the average result per trade: win rate x average win - loss rate x average loss. With a 45% win rate, an average win of 2R and an average loss of 1R: 0.45 x 2 - 0.55 x 1 = 0.35R per trade. Over 100 trades that is about 35R before costs, if the numbers hold. A negative expectancy means that more trading loses more money.

Profit factor and drawdown

Profit factor is gross profit divided by gross loss. Above 1 means a net profit; the further above, the more margin you have for costs. Always read it with the maximum drawdown and the longest losing streak, which tell you whether you could survive and follow the strategy while it lasts.

Metrics about you, not the market

Add two columns that matter more than they look: "followed my plan" (yes or no) and your emotion before the trade. A journal often shows that plan-breaking trades are the main source of losses. The adherence rate is a number you control.

Keep it small and consistent

Record the same fields for every trade for at least a month before drawing conclusions. The free journal template on this site has the columns above, and you can paste it into any spreadsheet. Review weekly, change one thing at a time and avoid reacting to a single trade.

Key takeaways

Look at win rate with average win and loss, not alone.
R multiples compare trades fairly.
Expectancy = win rate x avg win - loss rate x avg loss.
Track whether you followed your plan.

FAQ

What is expectancy in trading? It is the average amount you expect to make per trade: win rate times average win minus loss rate times average loss. A positive number means the strategy made money on average in your sample.

Educational content, not financial advice.