You close your tenth trade of the week. Seven made money. Three lost money. That sounds like a decent week, until you look at the account and find you're down ₹600.
Where did the money go?
I'd start with those three losses. Counting the winners tells you how often you got a profitable result, but it leaves out how much each result was worth. One large loss can take back several small gains. That's the difference between win rate and expectancy: one counts the wins; the other works out the average result across all the trades.
Let's follow a made-up ten-trade record and find that missing ₹600. You can use the same calculation on your own practice results afterwards.
Count the wins, then look at what they paid
Win rate is the number of profitable closed trades divided by the total number of closed trades, multiplied by 100. If 12 of your 20 completed trades made money, your win rate is 60%. That number says nothing about whether each winner earned ₹50 or ₹500.
Decide what counts as one trade before calculating it. If you buy once and exit in three parts, counting each exit as a separate winner can distort the record. For a simple review, group those exits into the original position and calculate its combined result.
Use a consistent treatment for trades that finish flat. Include them in the total trade count and give them a zero result. Otherwise, two journals can show different win rates for exactly the same activity.
Put a number on the average result
For a record with no flat trades, the formula is: expectancy = (win rate × average win) − (loss rate × average loss). Enter 60% as 0.60. Write the average loss as a positive amount; the minus sign in the formula handles the subtraction.
Winning frequency and payoff size need to be read together. The same principle connects to position sizing and risk management: how much you lose on a losing trade matters alongside how often that loss occurs. A frequent winner can still produce a poor overall result.
You can also calculate historical expectancy more directly: add the net results of every closed trade and divide by the number of trades. Keep trades that finished at zero in that count too. The answer describes those trades. It isn’t a promise about the next one.
Where the ₹600 went
In our ten-trade week, the seven winners made ₹200 each on average. The three losers cost ₹600 each. That gives you ₹1,400 from the winners and ₹1,800 lost on the other trades. You’re already down ₹400 before charges, even though seven trades won.
Here’s the same result using the expectancy formula: (0.70 × ₹200) − (0.30 × ₹600) = ₹140 − ₹180 = −₹40 per trade. Across ten trades, that becomes −₹400.
Now imagine total charges of ₹200 across the ten trades. Net loss becomes ₹600, or ₹60 per trade. The ₹200 is a made-up total for this exercise. Check the actual charges on your own trades.
Consider another hypothetical ten-trade record. Four winners average ₹500, while six losers average ₹250. Gross winnings total ₹2,000 and gross losses total ₹1,500. The gross result is a ₹500 gain, even though the win rate is only 40%.
With invented total charges of ₹200, the net gain is ₹300. Historical net expectancy is therefore ₹30 per trade. That doesn’t make a lower win rate better. It shows why you need the amounts as well as the count.
We still haven’t looked at which trade happened first. The account could have had a difficult run of losses before finishing up. Look at the order of the trades, their sizes and whether you stuck to the same rules.
Check what you actually earned
Keep a separate column for rule changes. If you altered entries or exits halfway through the record, the combined expectancy mixes two versions of the method. Review the full total honestly, then label the separate versions when there is enough information to compare them. Don’t pretend the later rules were used on earlier trades.
Planning to make twice what you risk doesn’t mean your completed trades actually did that. You might exit winners early, experience worse fills on losses or close a position in several parts.
Use the amounts you actually made or lost. Keep planned reward and risk in separate columns so you can compare intention with execution. Neostox's trading rules guide provides broader context on planning and reviewing trades.
If charges are already deducted from each trade result, don’t deduct them again after calculating expectancy. Use either consistently net figures or clearly labelled gross figures followed by one cost adjustment.
Did you buy the same quantity each time? If not, that can change the average rupee result. One big winning position might account for most of the profit. Keep that trade in the record, but notice what it tells you: quantity helped produce the result too.
Keep quantity and initial planned risk beside each trade. You can also record results in R, where one R equals the original planned monetary risk for that trade. A ₹300 gain with ₹150 initially at risk is +2R before any further adjustment.
Don’t rewrite the original risk after the result is known. Compare rupee results and R results together, and keep trades with unclear initial risk visible rather than inventing a denominator.
Open the whole record
Start with one defined review period and include every closed position from it. Record entry, exit, quantity, costs and the reason for the trade. Match the total against your account record before interpreting the average.
Neostox's trading reports can support a review of simulated results. Keep any additional calculations in your own sheet instead of assuming a particular metric is automatically available. Neostox currently states that market prices are delayed by 30 days.
Then ask whether a few unusual trades explain most of the result. Check different periods without quietly removing difficult sessions. A positive average from a small or selectively chosen sample doesn’t establish a reliable future edge.
The existing guide to testing a strategy in a simulator explains the broader testing process. Use expectancy within that process, alongside the losses and conditions that produced it.
Go back to the week that started this article. Seven wins brought in ₹1,400. Three losses took out ₹1,800. Another ₹200 went on the example charges. There's your ₹600 loss, without any contradiction in the 70% win rate.
When you open your next report, do that small reconciliation first. If the total doesn't match, look for a missing exit, a partial position or a cost counted twice. Once the record makes sense, you can decide which part of your trading needs attention.