Glossary/ Risk
Risk
Expectancy
Hit rate times average win, minus miss rate times average loss. One number that says whether a method makes money over many trades.
Where this comes up
Lessons that use the term in context, which is usually more useful than the definition on its own.
- Sizing a position properly — From capital and stop distance to quantity — the whole calculation.
- Expectancy over a hundred trades — Hit rate and reward-to-risk, turned into one number.
- Risk of ruin — The probability nobody calculates before they need it.
- A journal that is worth keeping — What to record so that it changes behaviour.
Nearby terms
Backtest · Drawdown · Exposure · Hit rate · Leverage · Position sizing