Risk & Money Management
Intermediate
Profit Factor
Also called: PF
Total gross profits divided by total gross losses — a single number summary of strategy quality.
Definition
Profit factor (PF) of 1.0 = breakeven. 1.5 = decent. 2.0+ = strong. Anything above 3.0 in backtests is usually curve-fit unless the sample is huge.
Formula
Profit Factor = Sum of winning trades / |Sum of losing trades|