# Automated Forex System Trading – Maintaining Positive Expectancy

Ap = Average Profit
Pl = Probability of Loss
Al = Average lossExpectancy = (Pp x Ap) – (Pl x Al)In our first case:Pp = 0.5
Ap = \$35
Pl = 0.5
Al = \$25Expectancy = (0.5 X \$35) – (0.5 X \$25)= (\$17.5) – (\$12.5) = \$5So this system trading at \$1000 per trade has a positive expectancy of \$5 per trade when traded over many trades. The profit of \$5 is 0.5% of the \$1000 that is at risk during the trade.Now let’s examine how our Forex trading techniques, rules, and behavior can affect our profits. First let’s pretend we have experienced a run of losses and we are low on money because we are not properly capitalized. What happens if we lower the amount of money at risk and only trade \$500 per trade? This cuts our profits in half but does not affect costs and slippage. An average winning trade is now \$25, after costs and slippage we have \$25 -\$10 -\$5 = \$10 profits. This is a big hit to profits, but it is still a profit… right?If we examine our expectancy our numbers look like this:Pp = 0.5
Ap = \$10
Pl = 0.5