Traders express different opinions and constantly argue about what should markers of successful trade be like, what should be their maximum or minimum level, and we do not intend to give a specific and clear answer for each value. Our task is to reflect real markers in statistics, i.e. correctly calculate them based on your data using common formulas, and to show formulas we use.
Profit factor = Amount sum of profitable trades / Amount sum of unprofitable trades
Beginners are usually told that the profit factor should be at least 2 to 1. Professionals are not satisfied even with 5 to 1.
Profit factor can be calculated both for the entire period of trade and for a certain period of time. Let's consider an example. In January, the amount sum of all profitable trades was $1000. For the same period of time, the amount of all unprofitable trades was $400. So profit factor = 1000 / 400 = 2.5 or 2.5 to 1.
If you have not set a date filter in the report, the profit factor will be calculated for the entire period of time
Since we're talking about profit factor, we should take a look at another graph with the same name 'Profit factor'
The above graph was built 'By day'. I.e. it shows how that marker has changed day by day. Now let's draw it up by month
Let's look at one more graph, but this time in the marker field we choose 'Points' instead of 'Net profit'. Usually no one calculates the profit factor in points, but in fact, they should. You can get interesting information from this. So, what do we see? 2 different profit factors, the first one is equal to 1.51, the second is 1.64. I.e. a profit factor drawn up by points has a higher value. How can this be? Most likely when trading we incorrectly calculated a lot. It often happens that by points we benefit and by sum, we lose. To avoid this it is essential to calculate a lot at all times. The calculation formula is almost the same:
Profit factor = Sum of profitable trade points / Sum of unprofitable trade points