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Profit Factor Calculator

Divide gross profit by gross loss to see how many rupees a strategy won for every rupee it lost.

Quick answer: The profit factor is the ratio of gross profit to gross loss across all trades. This tool divides the sum of your winning trades by the magnitude of your losing trades: a value above 1 means the strategy made money before costs, and roughly 1.5 or higher is often considered solid. It is a compact summary of edge, though it hides how that edge is distributed between many small wins or a few large ones.

Gross profit — sum of all winners (₹)Gross loss — sum of all losers (₹)

How to use it

Add up the rupee profit of every winning trade and enter it as gross profit, then add up the rupee loss of every losing trade (as a positive number) and enter it as gross loss. The output is the profit factor and the net profit. Above 1 the system is gross-profitable; the further above 1, the more cushion it has to survive real trading costs.

Formula

Profit factor = Gross profit ÷ Gross loss

Gross profit is the sum of all winning trades; gross loss is the absolute sum of all losing trades. Net profit = Gross profit − Gross loss.

Frequently asked questions

What is a good profit factor?

A profit factor above 1 means gross winners exceed gross losers. Values around 1.5 to 2 are often regarded as solid for a realistic system, while figures below 1 lose money. Extremely high values usually indicate too few trades or an overfitted backtest rather than a durable edge.

Does profit factor include trading costs?

Only if you subtract costs from each trade first. If you input gross figures, the profit factor overstates the real edge, because brokerage, STT and slippage eat into every trade. Always recompute it on net-of-cost results for a truthful number.

How is profit factor related to expectancy?

Both summarise edge but differently: expectancy is the average rupee or R result per trade, while profit factor is the ratio of total winnings to total losses. A system can have a profit factor above 1 yet small expectancy if it trades rarely, so read them together.

Can a high win rate give a low profit factor?

Yes. If the few losing trades are much larger than the many winners, gross loss can rival gross profit despite a high win rate, pulling the profit factor toward 1. This is exactly why win rate alone is misleading.

Why is an infinite profit factor a warning sign?

If a backtest has no losing trades, gross loss is zero and the profit factor is infinite. In practice that almost always means the sample is too small or the test is unrealistic, not that the strategy never loses.

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