Definition, as the journal computes it
Profit factor = net P&L of winning trades ÷ net P&L of losing trades, without the minus.
- With no losing trades there’s nothing to divide by. The result is a typed “no losses”, never Infinity. It still carries the winners’ total, which may be 0 if every trade was a breakeven.
- With losses but no wins, profit factor is 0.
- Breakevens add nothing to either side.
From the journal's written definitions: Profit factor
On this page
What is profit factor?
Profit factor is what your winning trades made divided by what your losing trades lost, without the minus sign. Above 1, your winners made more than your losers lost, after costs; below 1, they made less.
Both sides use net P&L, after commission, swap and fees, like every figure in the journal. Breakeven trades add nothing to either side.
How do you calculate profit factor?
Add up the net P&L of every winning trade, add up the net P&L of every losing trade, and divide the first by the second without its minus. The sample account’s winners made $390.00 and its losers lost $290.00, so its profit factor is $390.00 ÷ $290.00, about 1.34.
- Winners$120.00 + $90.00 + $30.00 + $150.00= $390.00
- Losers$60.00 + $75.00 + $45.00 + $60.00 + $50.00= $290.00
- Profit factor$390.00 ÷ $290.00 is about 1.3448 rounded to 1.34
The sample’s trades are listed on the trading metrics page.
What does a profit factor of 1.5 mean?
It means your winning trades made $1.50 for every $1.00 your losing trades lost. A profit factor of exactly 1 means the two cancelled out, so net P&L was zero.
Below 1, the losers took more than the winners made: at 0.80, every $1.00 lost brought back only $0.80.
What is a good profit factor?
There is no single good number, because profit factor depends on how you trade: frequent small wins and rare large wins can both be profitable. What it can’t do is sit below 1 and make money, and on a few dozen trades one big winner can lift it a long way.
In the sample account, take out the single +$150.00 trade and the profit factor falls from about 1.34 to $240.00 ÷ $290.00, about 0.83. Read it next to your win rate, your expectancy and the number of trades behind it.
What happens to profit factor with no losing trades?
There is nothing to divide by, so the journal shows “no losses” instead of infinity. With losses but no wins, profit factor is 0.
“No losses” usually means a short period or a small sample, not a perfect strategy. The journal still shows what the winners made, which is $0.00 if every trade was a breakeven.
How is profit factor related to win rate and average win and loss?
Profit factor = (win rate × average win) ÷ (loss rate × average loss, without the minus). For the sample account that is (0.40 × $97.50) ÷ (0.50 × $58.00) = $39.00 ÷ $29.00, about 1.34 again.
That’s why a low win rate can still have a high profit factor when the wins are much bigger than the losses, and a high win rate can sit below 1 when they aren’t.