Expectancy = (Win rate × Avg win) − (Loss rate × Avg loss) − Transaction cost
This is the average profit (or loss) per trade if you run the system many times. Positive = profitable system. Negative = bleeding money, no matter how clean the chart setups look.
A 70% win-rate system with +0.5% avg win and 3% avg loss has expectancy of (0.70 × 0.5) − (0.30 × 3) = -0.55%. Loses 0.55% per trade in expectation. The "high win rate" was a trap.
Meanwhile, a 40% win-rate system with +4% avg win and 1% avg loss has expectancy of (0.40 × 4) − (0.60 × 1) = +1.0%. Makes 1% per trade. Twice the loss rate, but a positive system.
This is why high-win-rate marketing is so misleading. The win rate alone tells you nothing about profitability. Always combine it with average win and average loss to see whether the math actually works.
Use the realistic figure for your venue. A system that's profitable gross but breakeven net is a system that looks good and doesn't actually make money.