All lessons
R multiples and expectancy
Winning often and making money are not the same thing. The size of wins and losses also gets a vote.
Evaluate results using planned risk and average outcomes rather than win rate alone.
Define one R as the cash amount initially planned at risk for a trade. If that amount is USD 10, a USD 20 net gain is +2R and a USD 15 net loss is −1.5R. Keep the original denominator even if the stop later moves.
Expectancy is an average outcome: win probability multiplied by average win, minus loss probability multiplied by average loss magnitude. Use net results after costs and a consistent sample. A high win rate can coexist with negative expectancy when occasional losses are large.
Historical averages are estimates, not promises. Small samples, changing conditions and unusual losses create uncertainty. Track sample size and the distribution of outcomes, including trades that did not follow rules. Do not disguise an incomplete test by selecting only favourable trades.
Let’s use numbers · hypothetical example
In ten hypothetical trades, four win +2R and six lose −1R. Total is +2R and average +0.2R before any omitted costs. At +1R winners instead, total becomes −2R despite the same win rate.
Keep in mind
Planned reward-to-risk is a target ratio; realised expectancy uses actual outcomes and may be very different.
Your turn
Create ten simulated outcomes and calculate total R, average R and win rate. Then include a −3R gap loss.
A quick check before we move on
Can a strategy with more winning than losing trades still lose money?
- No, a majority win rate guarantees profit
- Only if the chart is incorrect
- Yes, if losses and costs outweigh gains
Check answer
Yes, if losses and costs outweigh gains Win frequency alone ignores the size of wins, losses and costs.
Sources and further reading
Content reviewed: 29 October 2026
Educational material with hypothetical examples. Trading can cause substantial losses. A course, pattern, stop order or past result cannot guarantee a profit or limit every loss. Practise in simulation and check current rules and product terms in your jurisdiction.
