Profit factor is the ratio of everything a set of trades made to everything it lost. It is the second most quoted statistic in trading, after win rate, and the two are quoted together for a reason: each one is exactly what the other leaves out.
How to use it
Enter how many trades won and the average win, how many lost and the average loss. The calculator returns gross profit, gross loss, the profit factor, the win rate and the expectancy per trade.
The arithmetic
gross profit = winning trades × average win
gross loss = losing trades × average loss
profit factor = gross profit ÷ gross loss
win rate = winning trades ÷ all trades
expectancy = (gross profit − gross loss) ÷ all trades
Forty-five wins averaging 180 and fifty-five losses averaging 100: gross profit 8,100, gross loss 5,500, profit factor 1.47, win rate 45%, expectancy +26 per trade. The strategy loses more often than it wins and makes money, because the wins are larger.
What it cannot tell you
How many trades it rests on. A profit factor of 1.47 on a hundred trades and on ten thousand trades are the same number and entirely different facts. The first could be luck; the second almost certainly is not.
NusaTerminal reports profit factor on every backtest, next to the trade count, and then reports the figure that combines them - the lower bound of the average R at 99% confidence. That is the number the automation engine reads before it is allowed to trade. A high profit factor on a small sample does not pass it.