Profit Factor
Definition
Profit Factor is the ratio of all money earned to all money lost over a period. Above 1 the strategy is profitable, below 1 it is losing. At an 80% payout a profit factor of 1.0 corresponds to a 55.6% win rate; the metric is meaningful over a distance of 100 trades or more.
Formula and calculation
Profit factor = sum of all wins ÷ sum of all losses.
An example over 100 trades of $20 at an 80% payout and a 58% win rate: wins brought 58 × $16 = $928, losses took 42 × $20 = $840. Profit factor = 928 ÷ 840 = 1.10 — the strategy earns.
For binary options with a fixed trade amount the metric is directly tied to win rate and payout:
| Win rate at 80% payout | Profit factor |
|---|---|
| 50% | 0.80 |
| 55.6% | 1.00 |
| 58% | 1.10 |
| 60% | 1.20 |
The 1.0 threshold is the same break-even threshold seen from the other side: 55.6% at an 80% payout.
In the terminal
BinoView Supercharts shows the series statistics — how much was earned and how much lost. The profit factor takes one division from there, no separate formula needed. The rule is simple: while the ratio stays above one on a decent sample, the strategy is worth continuing; once it drops below, the next step is reviewing trades, not raising amounts.
How it differs from expected value
Both metrics answer the question "does the strategy earn," but in different forms. Expected value is the average result of one trade in money — handy for forecasting "what happens after 100 trades." Profit factor is a dimensionless ratio — handy for comparing strategies regardless of trade size. Their boundary is shared: zero expected value is exactly a profit factor of 1.
Frequently asked questions
What profit factor counts as good?
Consistently above 1 over a long distance is already a working strategy; 1.1–1.3 is a good result for binary options. Much higher values over a short stretch usually signal not a brilliant strategy but a small sample: a couple of lucky days easily paint a profit factor of 2 that deflates over distance.
Why can't you judge by 20–30 trades?
Because over a short sample the metric jumps around randomly: one extra streak of wins or losses changes it severalfold. From 100 trades on, the contribution of chance drops noticeably, and the profit factor starts reflecting the strategy itself rather than a particular week's luck.
Why is profit factor better than win rate?
It accounts for money, not just the score. A 60% win rate says nothing about the result until the payout is known; the profit factor already contains both sides — how much the wins brought and how much the losses took. One look at the number shows whether the strategy earns.