The difference between the two examples is that one is referencing the expectancy per trade, while the other is the expectancy per $1 risked.

Here’s what I mean:

Expectancy = (% of wins x average win size) – (% of losses x average loss size)

Per trade that would be:
(80% x $100) – (20% x $1000) or $80 – $200 = –$120

Per $ risked that would be:
(0.8*1) – (0.2*10) or 0.8 – 2 = -1.2

Hope that helps clear things up.

Your Trading Coach,

David Jenyns

(% of wins x average win size) – (% of losses x average loss size)

So in our example we can see that:

(80% x $100) – (20% x $1000) or $80 – $200 = –$120

In this chapter you express expectancy as a decimal instead of a dollar amount:

“If your system has an expectancy of +0.75, on average, you would expect to make 0.75 times the amount you risked in the trade.”

I’m a little confused, does this mean that in the first example
that I would lose $120 for every dollar I risked?

Thanks for the prompt…

Yes, the spreadsheet in http://www.trading-secrets-revealed.com helps with the on going maintenance of your system – it calculates all the key metrics you need to keep an eye on. Again, I very much appreciate your support.

Your Trading Coach,

David Jenyns

You did not mention your excel program “Trading Summary” which answers all these questions.

Again a great video