Improve Your Trading with Expected Values

Discretionary chart reading is problematic as you can’t backtest it and calculate the expected value of a trade.

Only trade set ups (the combination of entries, exits, and position sizes) that have positive mathematical expectation.

Get a simulator and backtest your trading ideas to find the expected value. The software I spoke about in an earlier episode will do the calculations for you.

Expected Value Formula

E = (Ave Win)(% Win)-(Ave Loss)(% Lose)

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