Expectancy after costs: the only number that counts

[Amanhasnoname]

Win rate and reward-to-risk get most of the attention. The figure that actually decides survival is expectancy per trade after all costs.

The calculation is simple. Multiply the win rate by the average win, subtract the loss rate times the average loss, and then subtract spread, commission and slippage. For a scalper, the cost term is a big part of the whole.

Imagine an average win of 4 pips, an average loss of 4 pips and a win rate of 55 percent. Before costs, expectancy is 0.4 pips per trade. With total costs of 0.6 pips, it's negative.

Small changes in cost have outsized effects. Shaving 0.2 pips off the average cost can be worth more than a big improvement in entry timing.

That's why cost control belongs at the centre of the strategy, not at the edge. The best way to improve results is often to trade at cheaper moments and skip the expensive ones.

One more habit: always report expectancy with a range, not a single value. A figure of plus 0.3 pips per trade with an error band that stretches below zero is a very different thing from the same figure with a tight band above it.

What is your expectancy per trade after every cost is counted?