What is Profit Factor — And Why It's the One Metric to Watch

Profit Factor = Gross Profit ÷ Gross Loss. If your winning trades total $10,000 and your losing trades total $5,000, your profit factor is 2.0.

Above 1.0 means you're net-positive. Below 1.0 means you're net-negative. The further from 1.0, the more skewed your distribution is.

Win rate tells you how often you're right. Profit factor tells you whether being right has paid you. A 70%-win-rate trader who lets losses run twice as far as winners has a profit factor of 0.86 — losing money — while a 35%-win-rate trader who cuts losses tight and lets winners breathe can sit at 1.8.

Profit factor captures both expectancy and discipline in a single number, which makes it more useful for review than either piece in isolation.

For futures day traders, profit factor above 1.5 over a 90-day window is solid. Above 2.0 is strong. Below 1.2 is unstable — small changes in execution can flip you net-negative.

Single-day or single-week profit factors are noisy and not useful for evaluation. Look at rolling 60-day or 90-day windows.

Track profit factor week-over-week and look for trends, not absolute values. Falling profit factor with stable win rate means losers are growing — usually a discipline issue. Falling win rate with stable profit factor means setups are working less often but you're still cutting losses well.

FundedNotes computes profit factor on a rolling basis and surfaces it in the dashboard alongside win rate and expectancy so you can read the three together.