# Expectancy

*Trading & Technical Analysis — Finicade finance glossary*

Expectancy is the average profit or loss per trade, combining win rate with average win and average loss. It's the only number that determines whether a strategy makes money, and it explains why a 30% win rate can be highly profitable while a 70% win rate can be ruinous. Positive expectancy plus sane position sizing is the whole of trading survival.

**Formula:** `Expectancy = (Win% × Avg win) − (Loss% × Avg loss)`

**Also known as:** trading expectancy, expected value per trade, win rate

**Related terms:** [Risk-Reward Ratio](https://finicade.com/glossary/risk-reward-ratio), [Position Sizing](https://finicade.com/glossary/position-sizing), [Expected Value](https://finicade.com/glossary/expected-value), [Trading Journal](https://finicade.com/glossary/trading-journal), [Backtesting](https://finicade.com/glossary/backtesting)

Source: https://finicade.com/glossary/expectancy