Profit factor and expected payoff meaning.

danielsoy

Sergeant
Messages
161
hi ppl.

watching my demo account statement (attached), found two lines that i don´t understand:

profit factor, and expected payoff.


Would like to know its meaning, and its importance related with my trading style, just to give it a
name...:p


Thanks a lot.
 

Attachments

WatanFX-Rep

WantanFX Representative
Messages
64
Profit.Factor = Gross.Profit/Gross.Loss

Expected.Payoff = Net.Profit/N
Where Net.Profit = (Gross.Profit - Gross.Loss) and N = # of trades

Read more: forums.babypips.com/newbie-island/34793-profit-factor-v-s-expected-payoff.html
 

simonnash

Recruit
Messages
7
Profit Factor

The Profit Factor is the ratio of the net profit versus the net loss. This ratio shows by how much the profit exceeded the loss. For example, a value greater than 1 means the strategy has generated more profits than losses.

Profit Factor = Gross Profit / Gross Loss


Expected Payoff

Amount of average money earned from all closed position. Calculated as net profit divided by total positions number... For example: you made 100 trades in one month and made a Total Net Profit of 1800 US Dollars. That means your Expected Payoff is 18 US Dollars (1800/100) per trade.

Expected Payoff = Total Net Profit / Total Number of Trades
 
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