Profit Factor
The ratio of profit to loss, measuring overall trading profitability.
Formula
More Details
What is Profit Factor?
Profit Factor is one of the most important trading metrics that measures the relationship between your gross profits and gross losses. It tells you how many dollars you make for every dollar you lose.
Formula
Profit Factor = Profit / Loss
Interpretation
| Profit Factor | Meaning |
|---|---|
| < 1.0 | Losing system |
| 1.0 - 1.5 | Marginal |
| 1.5 - 2.0 | Good |
| 2.0 - 3.0 | Excellent |
| > 3.0 | Outstanding (or small sample) |
Why Generic Calculations Are Misleading
Here's what most platforms won't tell you:
- Ignores Trade Sizing: A $100 profit on 100 shares vs 1000 shares are treated equally
- No Time Context: Doesn't distinguish overnight holds from scalps
- Commission Blindness: Usually calculated before commissions
- Setup Averaging: Hides which setups are working
How TradesViz Does It Better
TradesViz provides multi-dimensional profit factor:
- Per-setup profit factor
- Per-timeframe (scalps vs swings)
- Net vs gross (after commissions) - depending on your global filters, see profit factor after/before fees and commissions
- Position-size weighted option
- Time-segmented (morning vs afternoon)
Where to find it in TradesViz
Example
A trader with 10,000 in profits and 5,000 in losses has a Profit Factor of 2.0. However, you can't just use this stat alone because - what if, you have 1 large winning trade and many small losing trades? You need to dig deeper.