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Profit Factor Calculator

Formula

The formula to calculate the Profit Factor (PF) is:

$PF = \frac{GP}{GL}$

Where:

$PF$ is the Profit Factor
$GP$ is the Gross Profit ($)
$GL$ is the Gross Loss ($)

Profit Factor Definition

The Profit Factor (PF) is calculated by dividing the gross profit by the gross loss. It is a measure used in trading and investing to assess the profitability of a trading strategy. A Profit Factor greater than 1 indicates that the strategy is profitable, while a value less than 1 indicates a loss.

Example Calculation

Let's consider an example:

Gross Profit (GP): $5000
Gross Loss (GL): $2000

Using the formula to calculate the Profit Factor:

$PF = \frac{5000}{2000} = 2.5$

This demonstrates that with a gross profit of $5000 and a gross loss of $2000, the Profit Factor would be 2.5.