Hi all.
Does anyone here use expectancy?
I was wondering what is a good expectancy and/or expectancy score for a trading system.
I don't know of anyone else that uses expectancy so I have no idea what is good number in this regard.
I seem to be getting an expectancy of 0.2 for most things risking 1% and targeting 2%
Thank you.
----------------------------
Edit - some definitions:
Expectancy is how much you make for every $ risked per trade. So if I have an expectancy of 0.5, that means I make 0.5$ for every 1$ risked.
Expectancy = (%winners*average win)-(%losers*average loss)
Opportunity is how often you can trade with a given expectancy, the greater your opportunity to trade the better.
Opportunity = Trades per year
Expectancy Score is a combination of how often you can trade and your expectancy
Expectancy Score = expectancy*opportunity
Example:
System 1 - Expectancy of 0.2 with an opportunity to trade 100 times per year has an expectancy score of 20
System 2 - Expectancy of 0.5 with an opportunity to trade 10 times per year has an expectancy score of 5
Net Profit at years end:
System 1: +24.57% @1% risk per trade
System 2: +5.1% @1% risk per trade
Does anyone here use expectancy?
I was wondering what is a good expectancy and/or expectancy score for a trading system.
I don't know of anyone else that uses expectancy so I have no idea what is good number in this regard.
I seem to be getting an expectancy of 0.2 for most things risking 1% and targeting 2%
Thank you.
----------------------------
Edit - some definitions:
Expectancy is how much you make for every $ risked per trade. So if I have an expectancy of 0.5, that means I make 0.5$ for every 1$ risked.
Expectancy = (%winners*average win)-(%losers*average loss)
Opportunity is how often you can trade with a given expectancy, the greater your opportunity to trade the better.
Opportunity = Trades per year
Expectancy Score is a combination of how often you can trade and your expectancy
Expectancy Score = expectancy*opportunity
Example:
System 1 - Expectancy of 0.2 with an opportunity to trade 100 times per year has an expectancy score of 20
System 2 - Expectancy of 0.5 with an opportunity to trade 10 times per year has an expectancy score of 5
Net Profit at years end:
System 1: +24.57% @1% risk per trade
System 2: +5.1% @1% risk per trade