What's your mental image of a good trader?
Everyone carries an image of what a good trader looks like — calm, rich, confident — and measures themselves against it. The image shapes behaviour, often unhelpfully.
Examine yours:
- where your image came from
- how it helps or hurts you
- what you'd change about it
The expectancy guide replaces the image with measurable reality.
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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