Angie · learn
Profit factor
How many dollars the winners made for every dollar the losers cost. Below 1.0 the strategy loses money regardless of how often it is right.
How it is calculated
Profit factor = gross profit ÷ gross loss
A fuller explanation of this one is still being written. The definition above is the short answer.
See also
- Win rate — The share of trades that made money. High on its own means little, since many small wins and one catastrophic loss still lose.
- Total return — What the account gained or lost across the whole test, start to finish.
Educational content, not investment advice. Angie explains how a valuation is built so you can judge it yourself. What you do with that is your call.
