Expected Value

Return & Performance Metrics

The probability-weighted average outcome of a decision or trade, calculated by multiplying each possible outcome by its probability and summing the results. For example, a trade with a 60% chance of gaining $1000 and a 40% chance of losing $400 has an expected value of $400 ($1000 × 0.60 − $400 × 0.40). Positive expected value indicates a mathematically sound decision over the long term.

More in Return & Performance Metrics

Absolute Return StrategyAlphaCAGR (Compound Annual Growth Rate)Cumulative ReturnOmega RatioWin Rate

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