What Is Profit Factor? Rupees Won per Rupee Lost
Profit factor is gross profit divided by gross loss. Above 1.0 means a system makes money; the higher it climbs, the more cushion every losing trade has.
Profit factor measures how many rupees a system makes for every rupee it loses. It is the total of all your winning trades divided by the total of all your losing trades.
Profit factor = gross profit ÷ gross loss
How to read it
- Below 1.0 — the system loses money: losses outweigh wins.
- 1.0 — breakeven before costs.
- 1.5 — a strong, durable edge.
- 2.0 and above — excellent; every ₹1 of losses is covered by ₹2 of gains.
A higher profit factor means more breathing room: bad luck or a rough patch is less likely to push the system underwater.
A worked example
Over a month your trades add up to:
| Amount | |
|---|---|
| Gross profit (all winners) | +₹60,000 |
| Gross loss (all losers) | −₹30,000 |
| Profit factor | 2.0 |
60,000 ÷ 30,000 = 2.0 — the system earned two rupees for every rupee it gave back.
How to use it
- Pair it with sample size — a profit factor built on a handful of trades, or inflated by one huge winner, is fragile. Check it across many trades.
- Compare setups — read it alongside expectancy and win rate; together they describe both the size and the reliability of your edge.
- Mind the costs — brokerage, taxes, and slippage eat into gross profit, so a profit factor just above 1.0 may be breakeven in practice.
Educational content only. Tracktions is a trade-journaling and analytics tool, not investment advice — we are not SEBI-registered advisers and do not provide trade recommendations, tips, or assurances of returns.