e = wp - (1 - w)L

Where:
e is expectancy
w is win rate
p is average profit
L is average loss (positive number)

Do you know how much you expect to make on average for each trade you make?

If you know your win rate, average loss size and average win size, you can calculate your expected return per trade. This is essential for creating trade plans, position sizing, evaluating trading strategies and comparing strategies to each other. If strategy a returns 3.5% per trade and strategy b returns 4.5% per trade, you may want to consider how you can use strategy b more frequently or with larger size.

The file below can be used to calculate expectancy, or to solve for other variables like required win rate if the expectancy and the other variables are known.