Profit factor: What It Means

Profit factor is gross profit divided by gross loss. A value above 1 means the strategy made more than it lost over the period. A value of 1.5 means it made $1.50 for every $1 lost.

It is more useful than win rate alone, because a strategy can win most of its trades and still lose money if the losses are large. Treat very high profit factors on short records with suspicion, since they are often produced by a strategy that has not yet met its worst case.