Profit Factor
The ratio of gross profits to gross losses, measuring overall strategy profitability.
Full Definition
Profit factor is calculated by dividing total gross profits by total gross losses. A profit factor above 1.0 means the strategy is profitable; below 1.0 means it loses money. A profit factor of 1.5 indicates that for every dollar lost, the strategy earned $1.50. Professional traders typically seek profit factors of 1.5 or higher for viable strategies.