Most traders can tell you their win rate. Far fewer can tell you their expectancy, which is unfortunate, because expectancy is the one that answers the question they actually care about: does this method make money, and how much per trade?
Win rate, and why it misleads
Win rate is winners divided by total trades. It says how often you are right. It says nothing at all about how much you make when you are right or lose when you are wrong — and those are the terms on which an account grows or dies.
| Trader | Win rate | Avg win | Avg loss | Per 100 trades |
|---|---|---|---|---|
| A | 75% | $120 | $400 | −$1,000 |
| B | 35% | $500 | $180 | +$5,800 |
Trader A is right three times out of four and loses money. Trader B is wrong about two-thirds of the time and makes a living. If either one watched only their win rate, both would draw exactly the wrong conclusion about how they are doing.
Win rate is not useless — it is one of two inputs to the number that matters. It is only dangerous alone.
Expectancy: the one to watch
(win rate × average win) − (loss rate × average loss)
Trader B: (0.35 × 500) − (0.65 × 180) = 175 − 117 = +$58 per trade.
That single figure folds both halves together and tells you what one more trade is worth on average. It is what turns trading from a sequence of outcomes into something you can plan with: at $58 a trade, twenty trades a week is a forecastable income and a bad week is noise rather than evidence.
⚠ It is an average, and averages describe the long run. A positive expectancy does not make the next trade a winner, and a run of losses does not disprove it. That is the point of measuring it over a sample rather than feeling it.
Profit factor
Gross profit divided by gross loss. Everything you made, over everything you lost.
- Below 1.0 — losing.
- 1.0 to 1.2 — marginal, and commissions are likely eating the rest.
- 1.2 to 1.5 — a workable edge for an active trader.
- Above 2.0 — unusual over a large sample. Worth checking whether two or three outsized winners are carrying it, because if so the figure is a description of luck rather than method.
Profit factor and expectancy answer slightly different questions. Expectancy is per trade and tells you what to expect next. Profit factor is a ratio over everything and tells you how much cushion the method has.
Risk to reward, and the trap in it
Average win divided by average loss. A trader with 1:2 makes twice as much on winners as they lose on losers, and can therefore be profitable while being wrong most of the time.
The trap is quoting the intended ratio rather than the realised one. Almost everybody plans 1:3 and takes profit early, so the realised figure is usually far lower than the planned one. The realised number is the only one worth recording, because it is the one that happened.
Under about thirty trades, these figures move wildly with each new result and mostly describe luck. Around a hundred they start to be indicative. This has a direct and under-appreciated consequence for prop traders, below.
Why measuring per account throws it away
A trader running four prop accounts often reads four sets of statistics, one per firm dashboard. Each account might hold thirty or forty trades. Every one of those samples is too small to be meaningful, and they will disagree with each other — which is then read as "I trade better at that firm", when it is just noise.
Your edge belongs to your method, not to whoever is holding the account. The same setup traded across four firms is one hundred and sixty trades of evidence, and splitting it four ways converts one useful sample into four useless ones.
The useful cuts are the ones that describe your trading rather than your admin:
- By instrument — the same method rarely works equally on everything.
- By time of day — the most common finding in any journal, and usually the most actionable.
- By setup — which of the things you do actually pays.
- By how you felt taking it — the cut nobody has, because it needs a journal rather than a broker statement.
- After a win, and after a loss — where discipline problems show up as numbers.
And subtract the costs
Every figure above should be computed net of commissions. At a few dollars a round turn, a positive gross expectancy of $8 per trade can be a negative net one, and the gross version will keep telling you the method works while the account shrinks. If your journal reports gross, it is answering a question you did not ask.
Or have them computed for you
Choptick shows net P&L, win rate, profit factor, expectancy per trade and realised risk-to-reward across every account at once — broken down by instrument, session, setup and sentiment, net of commissions.
See ChoptickFigures in the examples are invented and illustrative. Nothing here is financial advice.