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RISK · PROFIT-FACTOR RULE

Profit-Factor Journal Reviews in Crypto: When the Common Rule Produces a Misleading Result

'A profit factor above 1.5 means a good system.' On a small sample or with one big trade, the ratio can say very little.

By ChartsPod Editorial Team · Reviewed by ChartsPod Research
Published · Updated · 5 min read

Short answer

Profit factor = gross wins ÷ gross losses. With 12 trades, a PF of 1.8 can come from a single large winner; removing it might drop PF below 1. PF also ignores drawdown and trade frequency, and changes depending on whether fees are counted in wins, losses or both. Report PF with trade count, PF without the largest trade, fee treatment and max drawdown.

Worked example

StepValue
Trades12
Profit factor1.8
Largest win share≈ 55% of gross wins (illustrative)
PF without it≈ 0.8
Missing contextDrawdown, fees, count
Profit factor (illustrative)Profit factor (illustrative): All 12 trades 1.8 ; Without top trade 0.8 .PROFIT FACTOR (ILLUSTRATIVE)All 12 trades1.8Without top trade0.8
One trade made the ratio. Original ChartsPod editorial graphic.

Context to add

Profit factor reportProfit factor report: Trade count; Fee treatment; PF without top trade; Max drawdown; Rolling PF.PROFIT FACTOR REPORTTrade countFee treatmentPF without top tradeMax drawdownRolling PF
A ratio needs a denominator you trust. Original ChartsPod editorial graphic.

Worked PF with fees: Profit-Factor Journal Reviews: A Worked Crypto Example With Fees Included.

Conclusion

Related: Profit-Factor Journal Reviews: A Worked Crypto Example With Fees Included, Trading Expectancy in Crypto: When the Common Rule Produces a Misleading Result.

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Profit factor = gross wins ÷ gross losses.

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Questions readers ask

Is a profit factor of 1.5 good?

Depends on sample size and context.

Why remove the top trade?

To test dependence on one outcome.

Fees?

State how they're counted.

Sources and methodology

Arithmetic uses standard sizing formulas. Fee rates (0.05% taker, 0.02% maker), slippage and funding values are illustrative; check your venue's schedule. Liquidation figures are simplified approximations; exchanges calculate them with their own maintenance-margin rules (see Bybit's documentation).

  1. Bybit: Liquidation process — mark price and margin modes.
  2. ChartsPod: product overview, pricing and FAQ — free terminal, venues, modules, no order placement; checked 17 Oct 2026.

This article explains research tools and workflows. It is not financial advice, does not recommend buying or selling any asset and does not predict prices. Crypto derivatives carry a risk of rapid and total loss of margin.

CHARTSPOD EDITORIAL EDITION · RESEARCH AND EDUCATION ONLY · NOT FINANCIAL ADVICE.