Expectancy tells you how much you expect to make, on average, every time you open a trade. If it is $18, each entry is worth eighteen dollars in the long run — even though many individual ones lose.
An 80% win rate sounds spectacular until you see you make $10 when right and lose $60 when wrong. That strategy loses money: (0.80 × 10) − (0.20 × 60) = −$4 per trade.
Expectancy combines the two things that matter — how often you are right and how much you take when you are — into one number. That is why we look at it first.
Multiply your expectancy by the trades you take per month for an honest estimate of what to expect. If it comes out small, the answer is not to trade more: it is to trade better.
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