What it measures
Divide the sum of winning trades by the absolute sum of losing trades for one period. A factor of 1 means equal totals; above 1, recorded profits outweigh losses. It does not measure the proportion of winning trades or capital exposed.
Costs and sample
Use outcomes after costs per trade, or explicitly identify missing costs. Do not subtract every commission only from the denominator. Review sample size, dates and concentration: one exceptional winner can inflate a short sample.
Factor versus expectancy
Factor compares two totals; observed expectancy divides net outcome by trade count. A high win rate can coexist with a low factor when losses are large. Do not mix open-position P/L with realized results without stating the method.
Using an account audit
Compare periods, instruments and position sizes. Include equity drawdown and cash flows: a high factor does not establish a stable curve. Review the complete history rather than a screenshot or a period selected after seeing its result.
Illustrative example
Profits 1,500 and losses 1,000 over 100 trades: factor 1.5, net outcome 500 and observed average 5 per trade. A sample without losses cannot support a reliable finite factor for extrapolation.
Review checklist
- One period and currency for both totals.
- Consistent treatment of costs.
- Sample size and open trades identified.
- Drawdown and concentration checked before conclusions.