Glossary
What Is Profit Factor and How to Calculate It
The sum of all profits in R divided by the sum of all losses in R. Above 1 means net positive; Trading OS computes it in R, not money.
How it works
Profit factor (PF) shows how much profit you make for every unit of loss over a period. It's calculated as the sum of results from all winning trades, divided by the absolute sum of results from all losing trades. In a trade journal it's most useful to sum these in R rather than dollars, so PF doesn't get skewed by risk size changing during the period.
PF above 1 means total profit outweighs total loss: a PF of 2 means for every 1R lost, 2R was earned. PF of exactly 1 is the break-even point before accounting for fees, and PF below 1 means the system, as currently run, is losing money regardless of win rate.
PF should be read alongside sample size: two or three lucky wins can temporarily push the PF of a small sample to a level that won't hold up over the long run. A PF calculated across 200 trades tells you far more than one calculated across 15.
Example
Over a period, winning trades sum to 18R and losing trades sum to 9R. PF = 18 / 9 = 2. That means for every R lost, an average of 2R was made in profit.
Common mistake
A common mistake is calculating PF in dollars instead of R when risk per trade changed over the period. One outsized trade then distorts the number, and it stops reflecting the system's actual quality.
Read next
Related terms
Frequently asked questions
- What counts as a good PF?
- A PF above 1.5 across 50–100 trades usually signals a working system, but win rate and drawdown matter too — the number alone doesn't tell the whole story.
- Why can PF be above 1 while the account is still down?
- Usually because of fees, spread, and slippage, which PF calculated in R doesn't directly account for — check those separately in dollar terms.
Plan versus outcome — for every trade
The Trading OS journal keeps the planned RR and the actual R of each trade side by side and computes expectancy from real results.
No sign-up — the journal runs in your browser; an account is only needed for sync.