Who this is for — Traders watching only monthly P&L. PF answers: for each dollar lost in stops, how many gross dollars does the system generate?
Profit factor (PF) = gross profit / gross loss over a sample. Macro metric (whole period), complement to per-trade expectancy.
In plain terms — Two piles: money collected vs money burned. PF > 1 = more collected than burned — but not enough alone.
Indicative bands
| PF | Interpretation |
|---|---|
| < 1.0 | Losing system |
| 1.0 – 1.3 | Thin margin — fragile |
| 1.5 – 2.0 | Typical professional zone |
| > 2.5 | Verify sample and outliers |
Mandatory context
High PF with unsustainable max drawdown = accounting illusion. Always PF + DD + sample size.
Typical mistake — PF 5 on 20 trades with one +10R outlier — not generalizable.
Example — 6 months: +$12,000 gross, −$6,000 gross → PF = 2.0. Max DD −8% → live candidate after forward test.
Summary sheet
- Formula: gross profit / gross loss.
- Min sample: 50–100+ trades.
- Pair: expectancy + max DD.
Silver path — Metrics module. Index: Silver path.