Expected Value (EV)
The probability-weighted average outcome of a trade over many repetitions: EV = (Win% × Avg Win) - (Loss% × Avg Loss).
Explained Simply
Expected value is the single most important concept in trading. A positive EV means you'll make money over time if you keep taking the same type of trade. You can have a low win rate and still have positive EV if your winners are much bigger than your losers. Example: 40% win rate with average win of $300 and average loss of $100: EV = (0.40 × $300) - (0.60 × $100) = $120 - $60 = +$60 per trade.
How Tradewink Uses Expected Value (EV)
Every signal has an implicit expected value calculated from the AI's estimated win probability and the defined risk/reward ratio. Signals with negative or marginal EV are filtered out. The LearningEngine tracks actual EV by signal type over time and adjusts confidence scores to maintain positive EV across all categories.
Related Terms
See Expected Value (EV) in action
Tradewink uses expected value (ev) as part of its AI trading signal pipeline. Start getting signals that use this concept to find real opportunities.