Expected value
The average result you would get if you repeated something many times, weighting each outcome by how likely it is.
In plain English
Multiply each possible outcome by its probability and add them up. A single try can land anywhere, but over many tries the results average out close to the expected value.
Uncle Gary explains
A $2 raffle ticket with a 1 in 500 chance of winning a $500 hamper has an expected value of $1. Uncle Gary buys ten every Christmas and calls it a portfolio.
Why it matters for your money
A trade or strategy is worth taking only if its expected value after costs is positive. Exciting possible outcomes don't change that.
Where we tested it
- Where Do Missing Socks Go? A Statistical Investigation
- What Does a 30% Chance of Rain Mean? The Weather App Didn't Lie
- What Are the Odds of Winning the Lottery? And Does It Have a Pattern?
- Lesson 13: Expected Value: What a Bet Is Worth on Average
Related terms
All glossary terms. Educational content, not financial advice.