Expectancy Calculations

[simcom]

In my research into expectancy/expectation, I have come across multiple ways of calculating a figure. The two methods that stand out as the most common are as follows:

Expectancy = (Probability of Win * Average Win) - (Probability of Loss * Average Loss)

Expectancy = (1 + Average Won/Average Lost) (Percentage Won Ratio) - 1

I'm interested to see what the consensus is about which of these (if any) is preferable (i.e. a more useful measure of a method's potential). Obviously, any calculation that utilises historical performance figures cannot give a guaranteed indication of what the future holds, but it's useful.

 

[RedGreenBen]

In my research into expectancy/expectation, I have come across multiple ways of calculating a figure. The two methods that stand out as the most common are as follows:

Expectancy = (Probability of Win * Average Win) - (Probability of Loss * Average Loss)

Expectancy = (1 + Average Won/Average Lost) (Percentage Won Ratio) - 1

They *may* be the same (it's too late in the day for me to do the maths) but the first version is definitely correct and the second may be, although the brackets might be a bit muddled.

Ben

 

[squall321]

I use P * average win * average loss - (1 - P)