Trading & signals glossary
What is profit factor?
Profit factor is the ratio between what a system makes and what it loses: gross profit divided by gross loss. Above 1, the system makes money; below 1, it loses. A profit factor of 1.5 means that for every dollar lost, the system made $1.50.
How it works
Add up the gains from every winning trade and the losses from every losing trade, then divide one by the other.
It’s a single number that tells you whether a system makes money, regardless of account size.
Like expectancy, it can be misleading with only a handful of trades.
+6 R
sum of the winners
÷ 4 R
sum of the losers
= 1.5
profit factor
> 1
the system makes money
How to calculate it
profit factor = gross profit ÷ gross loss (absolute value)
Example: ten trades
- 6 winners of +1 R each: +6 R in gains.
- 4 losers of −1 R each: 4 R in losses.
- Profit factor = 6 ÷ 4 = 1.5.
- If the losers were −2 R each: 6 ÷ 8 = 0.75 → a losing system.
Our data · Verpips
What we measure in signal channels
- 0.88
- median profit factor
- 6 of 18
- channels above 1
- 3,866
- trades measured
6 of 18 channels with a profit factor above 1
The median profit factor of the 18 channels we measure is 0.88: for every dollar they lose, they make 0.88. Only 6 of them have a profit factor above 1.
Verpips data as of Oct 7, 2026, measured against the real price. See how we measure and the channel directory.
Types and variations
- Below 1
- Loses money.
- Between 1 and 1.5
- Makes a little; costs can eat it up.
- Above 1.5
- Makes money with room to spare, if the sample is big enough.
Why it matters when choosing a signal channel
It’s one of the numbers system sellers love to show. Always ask how many trades it’s based on and whether costs are included: a high profit factor on twenty trades tells you very little.
Common traps
- Calculating it without the deleted trades.
- Calculating it from very few trades.
- Ignoring spreads and commissions.
Key takeaways
- ✓Profit factor = gross profit ÷ gross loss.
- ✓Above 1: makes money; below 1: loses.
- ✓Without a large sample, it’s not reliable.
- ✓Always ask how many trades it’s based on.
FAQ: profit factor
What’s a good profit factor?
Anything above 1 makes money; 1.5 or higher, over many trades and with costs included, is solid.
Are profit factor and expectancy the same thing?
No, but they move together: if profit factor is above 1, expectancy is positive.
Channel by channel
See these numbers for each channel, not as an average.
With a free account you see each channel’s result in R, its drawdown, and what it announced versus what actually happened.