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What is a good profit factor?
Above 1.0, the account made money over the period measured. Anything more specific than that depends entirely on how many trades the figure is built from — a profit factor computed from 15 trades and one computed from 500 are not making the same claim, even if the number printed is identical.
In plain English
How much you made for every unit you lost. A profit factor of 2 means the account's winning trades, added together, came to twice what its losing trades cost, added together — it says nothing on its own about how often you won, how big any single trade was, or in what order the wins and losses arrived.
The formula
Profit factor = Gross profit ÷ |Gross loss|. One decision changes the answer more than people expect: whether the gross figures include commission, swap and slippage, or exclude them. TapeSheet computes it net of costs, because a style that pays heavily in costs relative to its gross edge shouldn't read as stronger than it actually is once those costs are counted.
Worked example
A clearly hypothetical 20-trade sample, invented to show the arithmetic: 12 winning trades, 8 losing trades.
| Gross | Net of an $8/trade cost | |
|---|---|---|
| Gross profit | $2,663 | $2,567 |
| Gross loss | $1,030 | $1,094 |
| Profit factor | 2.59 | 2.35 |
Costs alone pull this account's profit factor down from 2.59 to 2.35 — a real effect, worth knowing, but smaller than what a single trade can do, shown next.
What counts as "good"
Anchoring to reference points that actually exist, rather than inventing one: 1.0 is breakeven before costs, the one number with a real mathematical meaning. MetaTrader prints profit factor on every account statement, so your own figure is directly comparable to your own trading history over time, which is a more meaningful comparison than any external number. For a composite read on system quality that accounts for more than profit factor alone, the commonly cited framework is Van Tharp's System Quality Number. Beyond those two anchors, any specific range quoted as "good" — 1.5, 2.0, whatever the figure — is a rule of thumb passed around the industry, not a measured benchmark from a named study, and should be labelled as exactly that rather than treated as a grade.
Sample size is the whole story
Take the same 20-trade sample above and remove just the single largest win, $640:
| Full 20 trades | Largest win removed | |
|---|---|---|
| Gross profit | $2,663 | $2,023 |
| Gross loss | $1,030 | $1,030 |
| Profit factor | 2.59 | 1.96 |
One trade, out of twenty, moves the figure from 2.59 to 1.96 — a 0.63 drop, more than costs alone managed across the whole sample. On a small number of trades, a profit factor is telling you as much about which trades happened to land in the sample as it is about the underlying edge. As a working rule: under roughly 100 closed trades, read the figure as a rough indicator, not a grade, and expect it to move meaningfully as more trades accumulate. See your own profit factor, gross and net of costs computed automatically the moment you have a real statement to check it against.
What profit factor doesn't tell you
The order the trades happened in, so nothing about how deep any drawdown ran along the way. Position sizing, so a profit factor built on wildly inconsistent bet sizes hides exactly how much of the result rode on the few largest positions. Whether one single outsized trade carried the whole sample, exactly the effect shown above. And whether the period measured spans one market regime or several very different ones, since a figure computed across a calm trending stretch and a volatile chop can both average out to the same number while describing two very different trading environments.
Profit factor vs win rate vs expectancy
Two hypothetical accounts, both landing on the same profit factor from completely different trading styles:
| Account A | Account B | |
|---|---|---|
| Win rate | 70% | 35% |
| Average win | $100 | $248 |
| Average loss | $140 | $80 |
| Profit factor (100 trades) | 1.67 | 1.67 |
Identical profit factor, opposite trading experience. Account A wins often, in small amounts, and loses somewhat larger but still modest amounts — a psychologically easy account to hold, with frequent small wins. Account B wins rarely but big, and loses often but small — a genuinely harder account to trade day to day, with long stretches of small losses between the infrequent large wins that actually produce the result. Profit factor alone cannot tell these two apart; win rate and average trade size, read together, can.
The practical difference shows up in how each account is actually lived with day to day, not just in the numbers on a summary page. Account A produces a steady run of small confirmations that the approach is working, which is easy to sit through but can mask a losing streak building slowly in the background if the losses ever start outrunning the wins. Account B spends most sessions losing small amounts and waiting, which is a genuinely harder psychological position to hold even when the underlying numbers are perfectly sound — a trader who abandons Account B's approach three losses before the next large win arrives never actually finds out the edge was real. Neither profile is more legitimate than the other; they simply demand different tolerances from whoever is trading them.
See it on your own statement
The MT4 statement analyzer computes profit factor, gross and net of costs, from your own real closed trades, parsed entirely in your browser with nothing uploaded. Building your own record by hand instead? The free trading journal spreadsheet has the same formula already built in.
See your real profit factor
Gross and net of costs, from your own statement, free.
MT4 statement analyzerQuestions
Is a profit factor of 1.5 good?
Above 1.0 before costs means the account made money over the period measured, and 1.5 is comfortably above that line. Whether 1.5 specifically counts as "good" is a rule of thumb, not a measured benchmark — no study defines a universal cutoff, and the number means very little on a small sample. The same 1.5 on 500 trades and on 15 trades are not the same claim.
Does profit factor include commission and swap?
It depends on whether it's computed from gross or net results, and this is worth checking on whatever tool or statement produced the number. TapeSheet computes profit factor net of commission and swap, because a trading style that pays a lot in costs relative to its gross edge should not look better than it actually is.
How many trades do I need before profit factor means anything?
There's no fixed cutoff, but treat anything under roughly 100 closed trades as a rough indicator rather than a grade. A single outsized trade can move the figure substantially below that size, which the removed-largest-win example on this page shows directly rather than just asserting.
What's the difference between profit factor and expectancy?
Profit factor is a ratio, gross profit over gross loss, with no reference to how many trades produced it. Expectancy is a per-trade average, in currency or in R, that already accounts for how often you win and by how much. Two accounts can share an identical profit factor while having very different win rates, average trade sizes and equity curves — see the comparison further down this page.
Can profit factor be negative?
No. Gross profit and gross loss are both summed as positive numbers before the division (gross loss is taken as an absolute value), so the ratio itself is always zero or positive. A losing account shows a profit factor below 1.0, not a negative one.
Profit factor ·Gross profit ·Net profit ·Expectancy ·System Quality Number ·Breakeven win rate calculator ·MT4 statement analyzer ·Trading journal spreadsheet
No specific profit-factor threshold on this page is presented as a measured benchmark — no study is cited, and none should be assumed. Both worked examples above are invented to show the arithmetic. This is educational information about measuring your own trading, not financial advice. Trading carries risk of loss. Full risk disclaimer.