Profit factor

Profit factor measures how much profit a trading strategy generates for every unit of loss it incurs. This is a key metric for evaluating the sustainability and "health" of a strategy’s risk-to-reward profile.

Exclusions: This metric is calculated using realized figures only; it does not include profits or losses from currently open positions.

Interpretation: A value greater than 1.0 indicates a profitable strategy, while a value below 1.0 indicates that strategy is losing money.

Calculation Formula

The Profit Factor is determined by dividing the absolute value of all winning trades by the absolute value of all losing trades.