Expectancy vs. Expectation; What’s the Difference?

Two of the most important stats that traders should pay attention to are also two of the least understood.  ‘Expectancy‘ and ‘Expectation.’   They are NOT the same.

I’m not going to get into any lengthy discussion here.  There are plenty of great articles out there on the web and in less than a split second, a google search will pull up many.  I highly encourage you to read up on these very two important stats.   This video is designed to merely explain to you a simple way to look at the difference between these two stats, how to find them on the UTA, and most importantly, how to quickly interpret what the numbers mean to your trading.

*Click the box on the bottom right for a full screen view.*

Let me know what you think of this video. Leave your comment below.

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6 Responses to Expectancy vs. Expectation; What’s the Difference?

  1. Ron Bradford says:

    What a lot of waffle, get on and trade, expectations are the ban of trading, if you trade with expectations then you will lose. Have a plan and trade to that plan if it’s wrong then adjust it, however if you have back tested it over time, then it should not hold a surprise

  2. Million says:

    Comfortably, the article is really the sweetest on this noteworthy topic. I fit in with your conclusions and will thirstily look forward to your next updates. Saying thanks will not just be sufficient, for the great clarity in your writing. I will right away grab your rss feed to stay informed of any updates. Fabulous work and much success in your business endeavors!

  3. luke sky says:

    looks realy good for determing the expectanct and expectation for money management purposes – will this also work on futures contracts for determining the position sizing for purposes of maximizing your system profit and include the risk of ruin so you dont bust your account?

  4. tjnoonan says:

    Skywalker, thank you for the excellent question. The answer is that it will show you valuable information regarding your maximum drawdown episodes and loss episodes; that is, the amount of time you are in drawdown before you make new equity highs. There is a very powerful part of the UTA in the EquityCharts tab that give you this information. As far as determining contract position sizing, it has a fixed fractional money management feature that will shine a lot of insight on this for you. So, to answer your question, yes it will show you that information.

  5. Mike says:

    Greetings, does the Ultimate Trade Analyzer backtest options strategies?

    I want to be able to deposit a certain amount in the account, set a date for some time in the past, get option prices for the underlying, enter an option trade (selling options) with a number of contracts. Then I will step forward with the backtester, and over a several week period I will purchase some of those options back, and some will expire on their own. I would like to see the profit/loss of this strategy over the time period tested, both in dollar amounts and annual percentages.

    Is this possible?

    Thank you.

  6. tjnoonan says:

    The UTA is a spreadsheet, programmed to keep track of trades. Each row or line, is meant to be used for a single, individual trade. Multi-positions need to be entered one row per position and the UTA will treat them as individual trades.

    You can set it up to back test options but you need to have the data to input; Entry price, date, time, exit price and then a trade setup type. If each option’s tick or minimum movement, .01 for example represents 1 option (100 shares) you can backtest it as such.

    The way to use the UTA is to determine whether your trade ideas and strategies work and to log your trades like a journal. It then helps you slice and dice the data to give you all kinds of useful information about your trades. I used it to develop and create the SST for example.

    I hope that helps.


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