Trading statistics

Profit Factor

Gross trading profit divided by absolute gross trading loss.

01 / Definition

What Profit Factor Means

Profit factor combines winning and losing trade dollars across a sample. It does not include timing or capital tied up unless those are added separately.

02 / Calculation

Profit Factor Formula

Profit factor = gross profit ÷ |gross loss|

03 / Worked Example

How to Read the Result

$18,000 of winning trades and $12,000 of losing trades produce a profit factor of 1.50.

04 / Boundaries

Limitations

Outlier wins can dominate.
Small samples invite overconfidence.
Omitted slippage, fees, and financing inflate it.

05 / Questions

Common Questions

Can profit factor be high with low win rate?

Yes. Infrequent large wins can outweigh many smaller losses.