anyone know how to find expected value in trading?

Expected Value = (winning rate x average amount won per trade) – (losing rate x average amount lost per trade)

Example

If your win rate is 60% and, on every trade, you win an average of $5; and your loss rate is 40% and on average you lose $4 per trade

EV = (60% x $5) - (40% x $4) = 1.4

A good Expectancy Value should always be positive and not negative. In the example I gave above, 1.4 is positive to that EV is good.

EV helps you find out the probability that every trade you take will end in a profit. I always calculate EV for every trading strategy separately, so I know which strategy is more profitable.

The best EV figure should be above 0.25.

Calculate EV using formula (win rate x amount won on each trade) minus (loss rate x amount lost on each trade)

You need to be honest with yourself when calculating EV, if possible, use an excel spreadsheet to populate all your wins in one column and all your losses in another then take the sum of each column.

Expected Value tells you whether your trading strategy is profitable over many trades, even if you lose sometimes.

It answers this question:

👉 “If I take this kind of trade 100 times, will I make money or lose money on average?”

How to Calculate Expected Value

You only need 3 numbers:

Win rate (how often you win)

Average win (how much you make when you win)

Average loss (how much you lose when you lose)

⭐ Formula:

EV = (Win rate × Average win) − (Loss rate × Average loss)

Where:

Win rate + Loss rate = 100%

✅ Simple Example

Let’s say your strategy:

Wins 50% of the time

Average win = $20

Average loss = $10

Calculate EV:

EV = (0.50 × 20) − (0.50 × 10)

EV = 10 − 5

EV = +5

⭐ Meaning:

On average, you make $5 per trade.

This is a profitable strategy even though your win rate is only 50%.