Profit Factor Formula

The mathematical formula for calculating profit factor to evaluate trading system quality.

The Formula

Profit Factor = Gross Profit / Gross Loss
Net Profit = Gross Profit - Gross Loss

Worked Example

Profit Factor Example

Total winning trades: $15,000, Total losing trades: $8,000
Profit Factor = $15,000 / $8,000 = 1.875
Net Profit = $15,000 - $8,000 = $7,000
Assessment: Good (above 1.5 is considered good)

Python Implementation

from gfil_calculators.position_size import calculate_profit_factor
result = calculate_profit_factor(15000, 8000)
print(f"PF: {{result['profit_factor']}}, Net: ${{result['net_profit']}}")

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