An attribute to consider when measuring the effectiveness of a trading system. It refers to how many opportunities, or trades, a particular trading system will provide to you. While some systems may have more favorable metrics like higher win rates, or larger profit factors, a system with lesser characteristics (

expectancy) may actually make you more money because the smaller, inferior edge is played out in more iterations, amassing a larger total profit than the other systems. Conversely, a lower-frequency system can generate more profits if the system trades its fewer opportunities more efficiently.

This concept is addressed on chapter 6 of Van Tharp's "

Trade Your Way to Financial Freedom"

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There’s one other variable involved in evaluating your system that’s just as important as its expectancy That factor is opportunity, our fourth variable. How often can you play the game? For example, suppose you could play either game 1 or 2. However, you are only allowed to draw one marble every 5 minutes playing game 2, whereas you are allowed to draw one marble every minute playing game 1. Under those conditions, which game would you rather play?

Let’s look at how the opportunity factor changes the value of the games. Suppose you could play the game for an hour. Since you could draw a marble every minute in game 1, you’d have an opportunity factor of 60, or 60 chances to play the game. Since you could draw a marble every 5 minutes in game 2, you’d have an opportunity factor of 12-or 12 chances to play the game. Remember that your expectancy is the amount you would win per dollar risked over a large number of opportunities. Thus, the more times you can play a game, the more likely you are to realize the expectancy of the game. In order to evaluate the relative merits of each game, you must multiply the number of times you can play the game by the expectancy. When comparing the two games over an hour, assuming that you only risk $1 each time, you’ll get the following results:

Game 1: Expectancy of 20 cents times 60 opportunities = $12.00

Game 2: Expectancy of 78 cents times 12. opportunities = $9.36

Thus, given the opportunity restraints that we arbitrarily imposed, game 1 is actually better than game 2 assuming you only risked $1 each time. And when you evaluate expectancy in the market, you must give similar consideration to the amount of opportunity your system presents you. For example, a 50 cent expectancy system (after transaction costs) that gives you three trades per week is much better than a 50 cent expectancy system (again after transaction costs) that gives you one trade each month.

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Also, it is explained well in

this video