September 17, 2025 • By Tradestial Team
Expectancy vs. Win Rate: Why High Win Rates Can Still Lose Money
Expectancy explains profitability better than win rate alone. Learn the formula and see worked examples.
- expectancy
- win rate
- risk-reward
Win rate is overrated without risk-reward context. Expectancy ties it all together.
The Formula
Expectancy = (Win% × Avg Win) − (Loss% × Avg Loss)
A 40% win rate with 2.5R winners can beat a 70% win rate with 0.8R winners.
How to Improve
- Cut average loss (tighter, logical stops)
- Increase average win (trail into strength, scale out later)
- Keep fees/slippage realistic in your journal