What is profit factor?
Definition
Profit factor is gross profit divided by gross loss over a set of trades. Above 1.0 means the trades made more than they lost.
If your winning trades made $6,000 and your losing trades lost $5,000, your profit factor is 1.2.
Profit factor is more useful than win rate alone because it accounts for the size of wins and losses. A trader can win 45% of trades and still be profitable if winners are larger than losers.
Members bring numbers like these to live reviews. The goal is not a target figure. It is a measurable process that can be audited and improved.
Related terms
General education only. Not financial advice.