Intermediate
Profit Factor
Total profit divided by total loss — above 1.0 means net positive.
Definition
Profit factor compares everything you won against everything you lost. You add up all your winning trades, add up all your losing trades, and divide. A value above 1.0 means your wins outweighed your losses overall; below 1.0 means the opposite. It is a quick way to judge whether a strategy is net positive without being fooled by win rate alone.
Example
Your winners total 1,500 and your losers total 1,000. Profit factor = 1,500 / 1,000 = 1.5.
Related terms
Where you see this in the app
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