Expectancy
The expected value of a single trade given your win rate and average wins and losses — positive expectancy is the condition for having an edge.
Definition
Expectancy is the average result of one trade given your win rate and your average win and loss — usually expressed in R or in money. It tells you whether a system has a positive expected value over a long series, not whether “the last three trades were green”.
Example
Win rate 40%, average win +2R, average loss −1R. Expectancy is roughly 0.4×2R + 0.6×(−1R) = +0.2R per trade. With 200 PLN risked per trade, that is about +40 PLN per trade over the long run — provided execution and costs do not eat the edge.
Anti-example / common mistake
A high win rate is not the same as positive expectancy. A system with 80% winners at +0.3R and 20% losers at −2R has a negative expected value. The second mistake: calculating expectancy on 10 trades instead of a sufficiently large sample.