A 40%-win system can be profitable. A 70%-win system can bleed. Here is why.
Expectancy is the average R you earn per trade across many trades: (win% × average win in R) − (loss% × average loss in R). If the number is positive, the system makes money the more you trade it. If it is negative, more trades just means losing faster. It is the single honest scoreboard because it folds win rate and payoff into one figure that neither can hide behind.
Win rate is the most quoted and least useful number in trading. A 40% win rate with +3R winners and −1R losers has an expectancy of (0.4 × 3) − (0.6 × 1) = +0.6R per trade — excellent. A 70% win rate with +0.5R winners and −2R losers is (0.7 × 0.5) − (0.3 × 2) = −0.25R — a slow bleed that feels great because you win most days. High win rate with poor payoff is the most seductive way to lose money.
Expectancy needs a sample to be trustworthy — thirty trades is a floor, not a guarantee. Under twenty closed trades, treat any number as directional, not decisive; a 70% win rate over ten trades can be 40% over a hundred. Track it as a rolling number and watch its direction more than its exact value. A falling expectancy while your win rate holds means your winners are shrinking or your losers are growing. The Ledger Report watches this for you and flags it before it becomes a drawdown.
Reading about R is the easy part. The journal makes you keep the stats — grade the setup before you know how it ends, and hear the one thing to fix next.
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