What is "Profit Factor"?

It is used to determine whether you have good risk management. Traders who have a high profit factor tend to do better than traders who have a low one.


A profit factor of 1 means you are breaking even. A profit factor of 2 means for $1 that you risk, you make $2. If you lose all your trades for the day or have no losses, your profit factor will be 0.

How is it calculated?

(Sum of your net winning trades) / (Sum of your net losing trades)

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