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What is trading expectancy, and why do professional traders rely on it instead of risk-reward ratios alone?

In this video, we explain the concept of trading expectancy and how traders can use probability and expected value to determine whether a trade is worth taking. You'll learn why some trades with less than a 1:1 risk-reward ratio can still have a positive expected outcome when the probability of success is high enough.

Using a Bank of Japan (BOJ) intervention scenario as a practical example, Giles breaks down:

• What trading expectancy is
• How to calculate expected value in trading
• The relationship between probability and risk-reward
• Why high-probability trades can justify lower reward-to-risk ratios
• How professional traders evaluate opportunities mathematically
• The difference between intuition and systematic decision-making

Whether you're a forex trader, swing trader, or investor looking to improve your trade selection process, understanding expectancy can help you make more rational, data-driven decisions.

Topics covered:

Trading expectancy
Expected value (EV)
Probability in trading
Risk management
Risk-reward ratio
High-probability trading setups
Forex trading concepts
BOJ intervention example
Trading psychology
Professional trading strategies

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