Expectancy, R-multiples and SQN for memecoin traders
A high win rate can still lose money. How expectancy, R-multiples, payoff ratio and SQN show whether a memecoin strategy has an edge, and why small samples lie.
Winning six trades out of ten feels good. But if winners make 20% and losers lose 60%, you are slowly losing money. Expectancy tells you whether a strategy actually has an edge.
R-multiples
R is the result of a trade measured in units of risk. A common definition: risk = cost × stop-loss percentage. Buy $100 with a 30% stop and your risk is $30; a $60 gain is +2R, a $30 loss is −1R. Measuring in R lets you compare small and large trades.
Expectancy
Expectancy = win rate × average win (R) − loss rate × average loss (R). Above zero, the strategy makes money over time; below zero, every extra trade loses more.
Payoff ratio and break-even win rate
Payoff ratio b = average win ÷ average loss. The break-even win rate is 1 ÷ (1 + b): a payoff ratio of 1 needs 50% wins, a ratio of 3 needs only 25%.
SQN
A common definition of SQN (system quality number) is the mean R divided by the standard deviation of R, times the square root of the number of trades. Two strategies with the same expectancy can differ a lot in how steady they are; SQN shows that.
Small samples lie
Five or six trades say very little. Wait for dozens of closed trades before drawing conclusions.
In TradeGuard
The dashboard's expectancy card shows win rate, net PnL, expectancy in R, payoff ratio, break-even win rate, max drawdown, longest losing streak and SQN for the window you choose. Trades with zero cost (such as airdrops) cannot produce an R and are excluded, with a count shown. An optional alert fires when expectancy turns negative, but only after a minimum number of closed trades (default 10). Data comes from your own wallet fills, collected by the browser extension.