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Next: turn it into an average per trade
The expected value calculator shows the average result of a bet from the win rate, the average win, the average loss and the costs.
What is included
- What it is, in plain words
- The formula or mechanism, with exact arithmetic
- How it hits grid, martingale and DCA bots
- A check you can run before you switch a bot on
Who it is for
- People who run or plan to run a trading bot
- Anyone reading a backtest or a bot sales page
- Readers who want the numbers, not the pitch
- Not advice, and not a signal service
Key facts
- Profit factor is gross profit divided by gross loss. Above 1 means the wins added up to more than the losses, and below 1 means they added up to less.
- In the made-up record below the profit factor is 1.23 before costs, 1.08 after a $8 cost per trade, and 0.96 without the single largest win (calculated by us on 28 Oct 2026, exact).
- It ignores how many trades there were, how deep the falls were and how long they lasted. Two records can share a profit factor and differ widely in risk.
- A high profit factor from few trades, or from one large win, is weak evidence. Check how it changes when the best trade is removed.
- Profit factor and win rate are linked through the payoff ratio, so a high win rate alone says little.
The formula
Gross profit = sum of all winning trades
Gross loss = sum of all losing trades, as a positive number
Take a made-up record of 100 trades: 45 wins averaging $150 and 55 losses averaging $100. Gross profit is 45 x 150 = $6,750. Gross loss is 55 x 100 = $5,500. The profit factor is $6,750 / $5,500 = 1.23. The record made $1,250 before costs, and that is 1.23 dollars won for every dollar lost.
Link to win rate and payoff
If every win is the same size and every loss is the same size, profit factor follows from two things you already know: the win rate and the payoff ratio (average win divided by average loss). The table shows it. A strategy can have a low win rate and a good profit factor if its wins are large, and a high win rate with a poor one if its wins are small. This is the same idea as expectancy, and the expected value calculator works it out for your numbers.
| Win rate | Payoff 1 | Payoff 1.5 | Payoff 2 |
|---|---|---|---|
| 30% | 0.43 | 0.64 | 0.86 |
| 40% | 0.67 | 1.00 | 1.33 |
| 50% | 1.00 | 1.50 | 2.00 |
| 60% | 1.50 | 2.25 | 3.00 |
The highlighted rows lose money for at least one payoff, and a profit factor below 1.00 is a losing record. At a 50 percent win rate and a payoff of 1 the profit factor is exactly 1.00, which is break-even before costs.
How costs and one big trade change it
Costs come out of every trade, so they raise the gross loss and lower the gross profit together. A cost of $8 per trade turns each win from $150 into $142 and each loss from $100 into $108. Gross profit becomes $6,390, gross loss $5,940, and the profit factor falls from 1.23 to 1.08. A strategy with a thin edge can be pushed under 1.00 by costs alone. See spread and slippage.
A second check is the largest trade. Suppose 44 of the 45 wins are $120 and one win is $1,470. The total gross profit is still $6,750. Take out that single trade and gross profit is $5,280, so the profit factor is $5,280 / $5,500 = 0.96. The whole edge was one trade. A record like that can repeat only if that sort of trade repeats.
How a bot meets it
- Grid and martingale bots. They win often in small amounts and lose rarely and large. Their profit factor can look very good for a long run, then fall below 1.00 after one loss. The martingale guide shows the ladder.
- Tuned backtests. A very high profit factor in a backtest is a warning sign of overfitting, so test it on data the bot has not seen.
- Short records. A profit factor from thirty trades has a wide range around it. See the win rate calculator for how wide.
How to read it next to the other numbers
Put four numbers side by side: the number of trades, the profit factor, the profit factor without the best trade, and the max drawdown. If the first is small, treat the rest as a sketch. If the third is below 1.00, the result rests on luck in one trade. If the fourth is large for the profit earned, the path was rough, and you would have had to live through it. A record that holds up on all four is still only a record of the past, but it has passed the cheapest checks.
What it does not tell you
It does not say how deep the falls were, which is the job of max drawdown. It does not say how many trades the result rests on, whether the trades were independent, or whether the strategy will keep working. Use it with the number of trades, the drawdown and the result without the best trade.
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FAQ
Frequently Asked Questions
What is profit factor?
Gross profit divided by gross loss. A value of 1.50 means the winning trades added up to one and a half times what the losing trades lost.
What is a good profit factor?
Above 1.00 means the record made money before anything else. How good it is depends on the number of trades, the costs and the drawdown. A very high value from few trades is more often luck or overfitting than skill.
How do costs affect profit factor?
They lower every win and raise every loss, so the ratio falls. A thin edge can drop below 1.00 once costs are included.
Can two bots have the same profit factor and different risk?
Yes. Profit factor ignores the number of trades, the depth of falls and the length of them, so two records can share a value and differ widely in risk.
How is profit factor linked to win rate?
When wins and losses are each the same size it equals win rate x payoff ratio / (1 - win rate), so the two numbers together decide it.
Are the numbers on this page real?
Example numbers are made up to show how the maths works, and the page says so. A figure only counts as exact when the page says it was calculated on a stated date. Nothing you enter in a calculator leaves your browser.
Can I use this to decide whether to run a bot?
It can show whether a bot's numbers hold together and how much an account can lose. It cannot say what the market will do, and it is not advice. Use it to ask better questions, then read the terms of your own broker or exchange.
Is this financial advice?
No. It is general education about a measure. The numbers are made up and your records will differ.
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