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 across a trading track record. It is one of the clearest single-number measures of whether a strategy actually makes money over time.
A profit factor above 1.0 means the strategy is profitable overall, while a reading below 1.0 means it loses money. The higher the number, the more profitable each dollar put at risk becomes. Professional traders generally look for a profit factor of 1.5 or higher before considering a strategy viable, and anything above 2.0 is considered strong.
For example, if a strategy made $17,300 in gross profits and lost $10,000 in gross losses over 100 trades, the profit factor is 1.73. That means for every $1 lost, the strategy earned $1.73. A strategy with a profit factor of 1.0 breaks even before costs, and one below 1.0 is unsustainable regardless of how good it looks on a single trade.
In copy trading, profit factor is one of the most reliable metrics to evaluate before allocating capital. SteadyFlowFX's 9-year backtest (2017-2026) shows a 1.73 profit factor — meaning gross winning trades are 73% larger than gross losing trades in aggregate; live results are verified on Myfxbook. That buffer above 1.0 provides meaningful cushion against periods of below-average performance.