ProfitProfitThe gain or loss on a closed position, once spreads, commissions, and swaps are taken out.Click the word to learn more factor is one number that tells you who weighed more, the winners or the losers. Take total gainsGainsThe sum of every winning position in a period, before losing positions are subtracted.Click the word to learn more, divide by total losses. A strategy that pulled 4,200 from winners and gave back 1,800 in losers has a profit factor of 2.33. Above 1, winners beat losers. Below 1, losers beat winners. At exactly 1, the strategy broke even.
Win rateWin RateThe percentage of closed positions that ended in profit over a given period.Click the word to learn more and profit factor answer two different questions. Win rate asks how often. Profit factor asks how heavy. A strategy can have a 40 percent win rate and a profit factor of 2: it wins less often, but when it wins, it wins big. A different strategy can have a 65 percent win rate and a profit factor of 1.1: it wins often, but every lossLossThe realized loss on a closed position, or the sum of every losing position across a period.Click the word to learn more almost erases the wins around it. Both can be profitable. Neither tells you the other side's number.
Reading the two together is what makes a strategy legible. Low win rate plus high profit factor is the trend-following shape. High win rate plus thin profit factor is the mean-reversion shape. Each carries its own risk, its own emotional curve, its own kind of bad month.
Javlot publishes both on every strategy page, on purpose, side by side.