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Positive Expectancy, key to long term trading success
Positive expectancy in trading is a mathematical measure that calculates the average amount of money a trader can expect to win or lose per trade over a large sample size. It is determined by the formula: (Win% x Average Win) - (Loss% x Average Loss), indicating that a positive result means the strategy is profitable over time, even if individual trades lose. A positive expectancy signifies that a trading strategy has a structural edge in the market, allowing the trader to grow their account through consistent execution regardless of short-term wins or losses.
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