RightEdge - The Ultimate Backtesting and Trading System Development Platform

Profit Factor

The profit factor is the system's gross profit divided by the gross loss.  This calculation indicates how many dollars are won for every dollar lost.  Profit factors of around 2.0 are ideal.  High readings on the profit factor (for example, readings above 3.0) might be over optimized.

See Also

Sharpe Ratio

Payoff Ratio

Recovery Factor

Risk Adjusted Return

Risk Assessment Options