Profit Factor
Actual-PnL based ratio comparing the monetary value of winning trades with losing trades.
Formula
More Details
What is Profit Factor?
Profit Factor is one of the most important trading metrics that measures the relationship between the PnL from your winning trades and the absolute PnL from your losing trades. In the total view, it tells you how many dollars your winners generated for every dollar lost.
Formula
Total Profit Factor = Total Winning PnL / Absolute Total Losing PnL
Average Profit Factor = Average Winning Trade PnL / Absolute Average Losing Trade PnL
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:
- Actual-PnL Based: Total Profit Factor uses the monetary value of your winning and losing trades, so larger PnL outcomes have more impact
- No Time Context: Doesn't distinguish overnight holds from scalps
- Commission Impact: Gross vs net PnL changes the result after commissions and fees
- Setup Averaging: Hides which setups are working
How TradesViz Does It Better
TradesViz provides multi-dimensional profit factor:
- Total Profit Factor based on total winning and losing PnL
- Profit Factor (Average) based on average winning and losing trade PnL
- Average and total views in Performance Metrics & Ratios
- PnL/Qty metrics when you want position-size-normalized analysis
- Net vs gross (after commissions) - depending on your global filters, see profit factor after/before fees and commissions
- Per-setup and per-timeframe breakdowns
- 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.