Most traders chase the next hot setup. Professional traders chase expected value (EV). Here's how to calculate yours.
What Is Expected Value?
Expected value tells you, on average, how much you can expect to win or lose per trade. It's the single most important metric in trading.
The formula:
EV = (Win Rate × Average Win) - (Loss Rate × Average Loss)
If EV is positive, your strategy is profitable over time. If negative, you're slowly going broke — even if you hit a lucky streak.
Real-World Example
Let's say you have a strategy with:
- Win Rate: 55%
- Loss Rate: 45%
- Average Win: $200
- Average Loss: $150
EV = (0.55 × 200) - (0.45 × 150)
EV = 110 - 67.50
EV = $42.50 per trade
After 1,000 trades, your expected profit is $42,500. That's the power of positive EV.
Tools to Track EV
The free trading toolkit at blog.quant-view.xyz/tools/ includes a trading journal that automatically calculates your EV per strategy, per pair, and per session.
The Bottom Line
If you don't know your EV, you're gambling. Professional traders track this number obsessively because it separates luck from skill.
Want to discuss EV and other trading math? Join us at t.me/GFIL_Trading or Discord.
Built with free trading tools at blog.quant-view.xyz/tools/
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