Formula.
Profit factor = total gross profit ÷ total gross loss. A value above 1 means the strategy made money over the sample.
Reading the number.
- Below 1: losing.
- 1.0–1.3: thin edge, sensitive to costs.
- 1.5–2.0: solid for most retail strategies.
- Very high values on a small sample are often luck.
Use enough trades.
Calculate it over at least 50–100 trades and include spreads and commissions, otherwise the number is misleading.
FAQ