Core terms
Profit factor
Total winning results divided by total losing results (as a positive number) over a sample, after costs. Above 1.0 the sample made money; below 1.0 it lost.
Profit factor carries the same information as expectancy in another form: a block with positive expectancy after costs has a profit factor above 1.0. It can be computed in dollars or in R, and the two can disagree. A dollar figure well above the R figure means larger sizes landed on the winners, by luck or by size drift.
Classification choices change it. In one Illustrative block, profit factor is 15.2 ÷ 7.2 = 2.11 if scratches count as losses and 15.2 ÷ 7.0 = 2.17 if they are left out.
Payoff ratio
Average win divided by average loss (as a positive number), after costs. It describes the size of wins relative to losses without their frequency; combined with win rate it gives the same picture as profit factor. It also depends on how scratches are classified.
What traders should verify
Compute profit factor in R and in dollars for the same block, state whether scratches are included, and report the trade count. As of 2026-10-05, the FennEdge Trading Journal shows profit factor and payoff ratio in dollars for broker-synced trades.
Do not conflate
Trader usage; there is no official definition, and tools differ on costs, scratches and gross vs. net classification. Compare numbers only under the same convention. A profit factor from a short sample can swing widely.
Primary source
Trader usage: there is no official definition, and platforms and tools may calculate it differently.