Profit factor.

Often, when testing new Forex trading strategies and automated advisors, one comes across such a concept as profit factor; it is this indicator that best characterizes the effectiveness of a trader.

Profit factor is a relative indicator that shows the ratio of profits received over a certain time period to losses. It is quite simple to calculate; to do this, we divide the profit for the reporting period by the losses for the same time - profit/loss.

For example, in March, 60 transactions were made in the trader’s client terminal, the amount of profit on which was $7,500, and the amount of losses was $3,200.

The profit factor will be equal to 7500/3200 = 2.34

That is, for the month of March we received 2.34 times more profits than losses, this indicator is important in a comparative analysis of trading efficiency.

Thanks to it, it is easier to find the most effective trading strategy. In this case, the following values ​​of this indicator can be noted:

• If the result obtained is greater than one, you have received a positive financial result at the end of the reporting period.

• A result less than one indicates that the total amount for unprofitable transactions exceeded the profit for profitable transactions.

Based on the peculiarities of calculations, the profit factor cannot have a negative value, but only zero, with it we can say that the trader did not receive a single profitable transaction during his work.

  The trader's terminal will allow you to automatically receive all the necessary statistics, including the profit factor indicator; for this, you just need to display a detailed report on the terminal screen.

To obtain it, open the “Account History” tab and use the right mouse button to select “Save as detailed report.” As a result, you will receive not only information on the profit factor, but a lot of other useful data on the statistics of your account.