E= [1+ (W/L)] x P – 1 where: W = Average Winning Trade L = - TopicsExpress



          

E= [1+ (W/L)] x P – 1 where: W = Average Winning Trade L = Average Losing Trade P = Percentage Win Ratio Example: If you made 10 trades and six of them were winning trades and four were losing trades, your percentage win ratio would be 6/10 or 60%. If your six trades made $2,400, then your average win would be $2,400/6 = $400. If your losses were $1,200, then your average loss would be $1,200/4 = $300. Apply these results to the formula and you get; E= [1+ (400/300)] x 0.6 - 1 = 0.40 or 40%. A positive 40% expectancy means that your system will return you 40 cents per dollar over the long term.
Posted on: Tue, 18 Jun 2013 06:41:24 +0000

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