How do you separate strategy from luck?
A winning month can be luck; a losing one can be good process. The separation takes records, samples and time — and most traders never do it because the emotional answer comes faster.
What's your method?
- the data you trust to separate the two
- the lucky streak you mistook for edge
- the good process that looked like failure
The expectancy guide is the tool for the separation.
Background: Risk-reward ratio, win rate and expectancy: the maths behind a trading edge
A high win rate can still lose money. See how win rate and risk-reward combine into expectancy, with break-even win rates and worked examples.
What is a good risk-reward ratio in forex?
There isn't one right ratio. What matters is expectancy, the win rate and ratio together. A 1:2 ratio breaks even at about 33% winners before costs, while a 1:1 ratio needs 50%.
How do you calculate trading expectancy?
Multiply the win rate by the average win and subtract the loss rate multiplied by the average loss. Measuring wins and losses in multiples of the amount risked (R) makes the result easy to compare.
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