Profit Factor Ratio

Profit Factor divides the gross profit from winning trades by the gross loss from losing ones. A value of 1.0 is the breakeven line: above it the wins outweigh the losses, below it they do not. Because it ignores trade frequency and position sizing, it describes the raw shape of a system's payoffs rather than how much money it made.

The metric says nothing about the order or depth of losses, so a system with one catastrophic loss can post the same Profit Factor as one whose losses were small and spread out. Read it next to maximum drawdown and a risk measure such as CVaR. It is also sensitive to sample size: a high Profit Factor over a handful of trades is mostly luck.