Profit factor - What you need to know #shorts #tradingstrategy #tradingstrategies #trading

#quantifiedstrategies #tradingstrategy #trading #shorts

The profit factor is a tool to tell us the “quality” of the returns. Why do we need it?

Because in hindsight, it’s easy to judge a strategy by the result – the CAGR or the annual return. But we don’t know the “quality” of the returns (the volatility of the returns). The profit factor is a tool to tell us more about the returns in terms of wins and losses.

In this video, we explain what the profit factor is, we show you how it’s calculated, and how you interpret it. Moreover, we establish what a good profit factor in trading is: not too low and not too high, either.

If you want to go into more detail about the profit factor, please have a look at our article on our webpage.

More about the Profit Factor:
https://www.quantifiedstrategies.com/profit-factor

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