What is Expectancy?
Expectancy answers whether your edge pays each time you repeat the setup. Positive expectancy means the system earns over many trades; negative expectancy means it bleeds even with a high win rate.
Formula
Expectancy = (Win% × Avg win) − (Loss% × Avg loss)
Indian market context (NSE)
Reference levels: Nifty 50 at 24,300, Reliance Industries at ₹1,300, Bank Nifty futures at 55,000 (lot size 30). Examples below show how Expectancy shows up on Indian index, equity, and futures books — update to live quotes in your journal.
Nifty 50 perspective
Nifty system: 52% win rate, avg win ₹1,100, avg loss ₹900 → positive expectancy per trade before costs — scale only after 50+ samples.
Reliance Industries perspective
Reliance playbook negative expectancy despite 60% wins if losers average ₹2,000 vs winners ₹800 — math beats narrative.
Bank Nifty futures perspective
Bank Nifty expectancy +0.35R per trade over 120 samples supports continued trading; one week does not reset the metric.
Rupee vs R-multiple expectancy
Rupee expectancy depends on position size. R-multiple expectancy normalises by initial risk and is better for comparing setups with different stop distances.
| View | Best for | Caution |
|---|---|---|
| Rupee expectancy | Account planning, monthly P&L | Size changes distort history |
| R expectancy | Comparing setups | Needs consistent stop logging |
How to validate
- Minimum sample: 30 closed trades on one strategy tag before trusting Expectancy.
- Check for one outlier week inflating Expectancy — export largest winners and losers.
- Recompute Expectancy after including brokerage, STT, and slippage on F&O tags.
- Compare Expectancy on the same date range as profit factor and max drawdown.
How to track in TradeLyser
- Open Strategy Board or analytics → filter by strategy tag and review period.
- Locate the widget or column reporting Expectancy (or export trades to compute manually).
- Store snapshot values in weekly review: Expectancy, profit factor, drawdown, trade count.
- If Expectancy is custom, add a spreadsheet column fed from TradeLyser CSV export.
Best practices
- Publish Expectancy per strategy, not only at account level.
- Use the same calculation window (weekly vs monthly) year-round.
- Pair Expectancy with sample size in every review slide or note.
- Reconcile Expectancy with broker statements before tax filing.
Common pitfalls
- Changing rules after fewer than 20 trades because Expectancy moved slightly.
- Mixing intraday and positional tags when computing Expectancy.
- Ignoring costs so Expectancy looks better than banked P&L.
- Letting one outlier trade dominate the Expectancy reading.
How to use this in TradeLyser
Tag every trade with planned risk (₹ or points). Review expectancy monthly per tag in analytics. If blended account expectancy is positive but one tag is negative, fix or retire the weak tag before adding size.
Reference guide
| Context | Value | Reading |
|---|---|---|
| Per trade (R) | Positive and stable over 50+ trades | Positive only because of one outlier |
Related terms
Profit factor summarises whether total winning rupees outweigh total losing rupees over a window. Below 1.0 means net losing; above 1.0 means net winning before you judge consistency.
Risk-reward ratio frames whether a setup pays enough when you are wrong often. A 1:3 plan risks ₹1,000 to target ₹3,000 — independent of whether you hit the target.
Win rate is the share of your closed trades that closed in profit after costs. It tells you how often you are right — not how much you make when you are wrong.
By trader level
Level up — system optimisation
Already journaling? Use these metrics to measure your edge, manage risk, and evolve your system.
FAQ
How is expectancy different from win rate?
Expectancy is average rupees or R per trade. You can have high win rate with negative expectancy if losses are large.
Should I use rupees or R for expectancy?
Use R for cross-setup comparison; use rupees for account planning. Log both in TradeLyser if helpful.
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