Positive expectancy: why hit rate lies
A trader can lose 60% of trades and end the year profitable. Here is the math, no Excel needed.
The misleading intuition
Everyone thinks a good trader wins "most of the time". Wrong. Most profitable professional traders have a hit rate between 35% and 50%. What makes them profitable is not the rate, it is the relative size of what they win versus what they lose.
The one‑line formula
Expectancy = (Win rate × Avg win) − (Loss rate × Avg loss). If you win 1 R on average (where R is your risk per trade) when you win, and lose 1 R when you lose, you need a hit rate above 50%. If you win 2 R when you win and lose 1 R when you lose, you are profitable from 34%.
Why it changes everything
This equation shifts the beginner’s work. It is no longer about "not being wrong" — a sterile illusion — but about building trades whose asymmetry is favourable. It is more restful, more measurable, more teachable.
The useful lesson
Before every trade, ask two questions: "How much am I risking?" and "How much can I make if I’m right?" If the second is not at least twice the first, pass. That is the single discipline that makes the others possible.