Profit Factor Explained: Measure Trading Gains vs. Losses

Summary

Hollow Point Trading explains profit factor using four hypothetical closed trades with costs included: $400 in total gains versus $200 in losses. The example shows why profit factor measures winning dollars against losing dollars, rather than win rate or account return, helping traders interpret performance more accurately.

https://youtu.be/_h4QGqSVhCk

Profit factor compares dollar totals, not your win percentage #Prof...

Profit Factor Explained: Measure Trading Gains vs. Losses
Profit factor is not your win rate or your account return. Consider four hypothetical closed trades, with costs already included. The gains are three hundred dollars and one hundred dollars. The losses are fifty dollars and one hundred fifty dollars. Total winning dollars are four hundred. Total losing dollars have a magnitude of two hundred. Pr...

profit factor trading metrics trading profitability win rate risk management trading education closed trades

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