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.