Expected Return Calculation

Expected return calculation is the mathematical determination of the likely profit or loss of an investment over a specific period. It factors in various possible outcomes weighted by their probability of occurring.

In derivatives trading, this calculation is essential for choosing between different strategies with varying risks and potential payoffs. For cryptocurrency, this calculation is challenging because of the uncertainty in price forecasting and the high volatility of the assets.

Traders use these calculations to ensure their portfolios have a positive expected value, which is a prerequisite for long-term survival in the markets. It is the core numerical basis for all investment decision-making.