The profit factor is defined as the gross profit divided by the gross loss (including commissions) for the entire trading period. This performance metric relates the amount of profit per unit of risk, with values greater than one indicating a profitable/tradable system. It is very important to track this matric to ensure that it does not fall below zero for a long period of time.
The profit factor is very easy to calculate. It is the ratio between gross profits and gross losses . If you analyze the advance performance matric for the Global Algorithmic Trading Software(GATS)-System #5 you will see that it has a profit factor of 2.17 for the period January 01, 2022 to January 31, 2022
You can learn more about profit factor and other performance matric such as Standard Deviation, Sharpe Ratio, Z-Score, Expectancy, AHPR, GHPR by registering for the Global Professional Proprietary Trading Course
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