[Haridas]

I was looking for word expectancy in this forum and did not find one.

I am sure somebody made at least 50 trades using this method. Could anyone calculate expectancy of this method?

According to this formula:
Expectancy = (W% x Ave W) – (L% x Ave L)

The expectancy number tells you how much money you would expect to win over many trades. The best way to get these statistics is to backtest your trading strategy, or employ your trading strategy with a demo account. Do this for many, many trades (at least 50), and then plug in the numbers.

Let’s look at a trader, Jeff, as an example:

Let’s say that trader Jeff has a trading system that he backtests manually in a demo account for six months, with over 900 trades, and he gets the following statistics.

W% – 70%

L% – 30%

Ave W – $200

Ave L – $420

Calculating expectancy, Jeff sees that (0.7 x 200) – (0.3 x 420) = $140 – $126 = $14. So, armed with this information, trader Jeff knows that if he takes 100 trades with his system, and the average winning trade is $200, and the average losing trade is $420, with a 70% win rate he is likely to have 70 winning trades, 30 losing trades and he will probably make $1400. How does Jeff know this? He knows this because he knows that (70 x $200) – (30 x $420) = $14,000 – $12,600 = $1,400.

This doesn’t mean trader Jeff will make $1,400. This only means that we would expect him to make $1,400 over 100 trades. Of course Jeff’s real results could be a little better or a little worse, but they are probably going to be very near $1,400 after 100 trades.

from: http://www.tradingmarkets.com/recent/why...41339.html