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Risk ManagementE
Expectancy
The average amount a trader expects to win or lose per trade. Calculated as (Win Rate × Average Win) – (Loss Rate × Average Loss).
Example
“With a 45% win rate, an average win of $300, and an average loss of $150, the trader's expectancy was (0.45 × $300) – (0.55 × $150) = $52.50 profit per trade on average.”