Ensuring Forex Quality

One obvious answer is ‘are you making money?’. This answer is very subjective though and a more scientific answer is really required. Fortunately, one already exists and is called the Expectancy Value of your trading system.

Your expectancy value will tell you the average amount you can expect to profit, over the long haul, for every $1 risked. Negative expectancy values produce losses whilst positive ones generate profits

So, how do you Calculate the Expectancy Value of Your Trading System? This is done using the following formula:

Expectancy = (%Win X Avg_Win) - (%Loss X Avg_Loss)

% Win = percentage of trades that are winners
% Loss = percentage of trades that are losers
Avg_Win = average size of a win
Avg_Loss = average size of a loss

Once you have obtained a positive expectancy system, money management will then be the biggest factor in how fast and how large your bankroll grows.