Calculate trading profit factor from gross results or win statistics, compare expectancy and break-even rate, or solve the average win needed for a target factor.

Use closed-trade amounts in one currency and on the same cost basis. Fees excluded from the inputs are also excluded from these results.

Profit Factor Formula

PF = GP / GL

Variables:

  • PF is the Profit Factor
  • GP is the gross profit ($)
  • GL is the gross loss ($)

For closed trades over one period and in one currency, profit factor is the sum of winning-trade profits divided by the positive magnitude of losing-trade losses. Use the same cost basis for both. Platform reports differ in whether fees are included; do not deduct charges twice. Zero losses provide no finite ratio, and zero wins with positive losses gives zero.

How to Calculate Profit Factor?

The following steps outline how to calculate the Profit Factor.

  1. First, determine the gross profit ($). 
  2. Next, determine the gross loss ($). 
  3. Next, gather the formula from above = PF = GP / GL.
  4. Finally, calculate the Profit Factor.
  5. After inserting the variables and calculating the result, check your answer with the calculator above.

Example Problem : 

Use the following variables as an example problem to test your knowledge.

gross profit ($) = 30

gross loss ($) = 50

PF = 30 / 50 = 0.6, with a net result of -20 on the entered basis.

Frequently Asked Questions

What is the significance of calculating the Profit Factor?

In trading, profit factor compares winning and losing closed-trade amounts in a specified sample. It does not establish investment return, drawdown, sustainability or future performance.

Can the Profit Factor be less than 1, and what does it indicate?

Yes. A factor below1 means losing amounts exceed winning amounts in that sample on the entered cost basis. A factor above1 means the reverse;1 balances those amounts. Fees excluded from the inputs remain excluded from this comparison.

Is the Profit Factor the only metric needed to assess the financial health of a business?

No. Trading analysis also needs sample size, drawdown, risk exposure, costs and other performance measures. A high sample ratio alone is not evidence of reliable future profits.

How often should the Profit Factor be calculated?

Choose a defined period or closed-trade sample and apply consistent inclusion and cost rules when comparing results. Recalculate when that sample changes; there is no universal required review interval.