Strategy comparison
Two strategies on different markets with different trade counts compared on one axis.
The single ratio that says whether a strategy is net positive. Add up every winning trade, divide by every losing trade. Anything above 1.0 is making money before costs.
It does not care how many trades you took. It cares about the size of the wins against the size of the losses.
Profit factor is the total profit from all winning trades divided by the total loss (in absolute value) from all losing trades. A profit factor of 1.5 means you make 1.50 USD for every 1.00 USD you lose. A profit factor of 0.8 means you lose 1.25 USD for every 1.00 USD you make.
Formula: Profit factor = sum(winning trades) / |sum(losing trades)|. It is a clean single-number summary, and it ignores trade count entirely - a strategy that takes 10 trades and a strategy that takes 10,000 can be compared on the same axis.
Profit factor sits next to expectancy and R-multiple. Together they say whether the edge is real. Pulling the numbers from real fills, not backtest output, is the only way to know what your live profit factor actually is - a trading journal that auto-syncs from the broker does that for you.
The ranges retail and institutional traders generally see across a meaningful sample of trades.
| Profit factor | Interpretation | What it means |
|---|---|---|
| Below 1.0 | Losing | The strategy bleeds money over time. |
| 1.0 - 1.3 | Marginal | Net positive but easily wiped by costs and drawdowns. |
| 1.3 - 1.5 | Solid | A typical, sustainable retail strategy. |
| 1.5 - 2.0 | Strong | A well-run strategy with a clear edge. |
| Above 2.0 | Very strong | Rarely sustainable across thousands of trades. |
It compresses an entire strategy into a single comparable ratio.
Two strategies on different markets with different trade counts compared on one axis.
Calculated from real broker P&L, profit factor already reflects spread, commission and slippage.
A 70% win rate looks great until you see the average winner is 0.3R. Profit factor catches that.
Profit factor calculated per setup ranks playbooks honestly. The losers stop hiding behind the winners.
Across a few hundred trades it stops jumping around. It is one of the few metrics worth quoting in a live track record.
Auto-calculated profit factor per account and per strategy means the number is always up to date.
Profit factor sits inside a small family of metrics every serious trader needs cold.
The dollar version of the same question - average outcome per trade.
Read →The unit that normalises trade outcomes to the risk you took.
Read →The other half of the conversation. Profit factor without drawdown is incomplete.
Read →What an edge is, and the metrics that prove you have one.
Read →How profit factor moves week to week and what to do when it drops.
Read →Profit factor calculated live from your real broker fills.
Read →Everything worth knowing about profit factor.
Profit factor is the ratio of gross profit to gross loss. It tells you how many dollars you earn for every dollar you lose. A profit factor above 1.0 means the strategy is net positive before costs.
Profit factor = total profit from winning trades divided by total loss (absolute value) from losing trades. Both numbers come from your closed trade history. Tracker Fx calculates it automatically per account and per strategy.
Above 1.0 is profitable. 1.3 to 1.5 is typical for a solid strategy. 1.5 to 2.0 is strong. Above 2.0 is very strong but rarely sustainable over thousands of trades. Below 1.0 means the strategy loses money over time.
Neither replaces the other. Win rate is the proportion of trades that win. Profit factor weights wins against losses by size. A strategy with 35% win rate and 3R average winners has a strong profit factor; a 70% win rate strategy with 0.3R winners can have a weak one.
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