A key performance metric that is the ratio of total gross profit to total gross loss of the strategy. It is calculated as (sum of all winning trades) ÷ (sum of all losing trades). A profit factor greater than 1 indicates the strategy’s gross profits exceeded its losses (it made money overall), while below 1 means losses were bigger than profits. For instance, a profit factor of 1.5 means the strategy earned $1.50 for every $1 lost. Higher values (e.g., >1.5 or 2) reflect stronger performance. This metric helps compare strategies’ efficiency at generating profit relative to risk.

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