Expectancy is the long-run average of a single positionPositionA single entry held on the broker account, with a direction, a size, and a current floating result.Click the word to learn more, given how often the strategy wins and how big its wins and losses typically are. The formula is plain: win rateWin RateThe percentage of closed positions that ended in profit over a given period.Click the word to learn more times average win, minus lossLossThe realized loss on a closed position, or the sum of every losing position across a period.Click the word to learn more rate times average loss.
Run the numbers on a strategy that wins 45 percent of the time, with an average win of 80 and an average loss of 50. Multiply 0.45 by 80 to get 36. Multiply 0.55 by 50 to get 27.5. Subtract: 8.5. Each position is worth, on average, 8.5 units.
Expectancy can be positive even when the strategy wins less than half its positions, as long as the wins are big enough to carry the losses. It can also be negative when the strategy wins more than half its positions, if the losses are big enough to undo them. Win rate alone never tells you which one you are looking at. Expectancy does.
The number on a Javlot strategy page is a measurement of what already happened on a live broker account over a defined period. If the strategy holds its character, expectancy projects forward usefully. If conditions change in a way the strategy was not built for, it will drift. Past expectancy is evidence. It is not a guarantee.