Profit factor (profit factor).

When testing new Forex trading strategies and automated advisors, you often encounter the concept of profit factor. This indicator best characterizes a trader's performance.

Profit factor is a relative indicator that shows the ratio of profit earned over a given period to losses. Calculating it is quite simple: simply divide profit for the reporting period by losses for the same period—the profit/loss ratio.

For example, in March, 60 transactions were made in the trader's client terminal, the total profit for which was $7,500, and the total loss was $3,200. The profit factor will be equal to

7,500/3,200 = 2.34.

That is, in March, we received 2.34 times more profit 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 obtained result is greater than one, you received a positive financial result for the reporting period.

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

Based on the peculiarities of the calculations, the profit factor cannot have a negative value, but only zero, in which case 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 obtain all the necessary statistics, including the profit factor indicator. To do this, simply display a detailed report on the terminal screen.

To get it, open the "Account History" tab and right-click to select "Save as Detailed Report." This will give you not only profit factor information but also a wealth of other useful statistics about your account.