Profit factor & R-multiple: how to read a track record honestly
Win rate alone tells you almost nothing. Here are the numbers that actually matter — and the tricks to watch for.
"90% win rate!" is the most misleading stat in trading. A system can win 9 of 10 trades and still blow up if that one loss is enormous. To judge any strategy — including ours — you need a handful of honest metrics and the context around them. Here's how to read a track record without fooling yourself.
R-multiple — measure trades in risk, not dollars
An R-multiple expresses a result as a multiple of the risk you took. If you risk $100 (that's 1R) and make $200, that's +2R; if you lose the $100, that's −1R. Thinking in R strips out account size and lets you compare trades fairly. A strategy with a fixed 2:1 reward-to-risk risks 1R to make 2R per win.
Win rate — necessary, not sufficient
Win rate is just the % of trades that win. On its own it's meaningless because it ignores the size of wins and losses. A 40% win rate at +2R/−1R is profitable; a 70% win rate where losers are 3× the winners is a slow death.
Profit factor — the number that ties it together
Profit factor (PF) = gross profit ÷ gross loss. It answers: for every $1 lost, how many dollars were won?
| Profit factor | Reading |
|---|---|
| < 1.0 | Losing system — loses more than it makes |
| 1.0 – 1.3 | Marginal — real but fragile; costs can erase it |
| 1.3 – 1.6 | Solid, sustainable edge for many strategies |
| > 2.0 (on large samples) | Excellent — but be suspicious of small samples or overfitting |
A modest, real profit factor on a large honest sample beats a spectacular one on 20 cherry-picked trades.
Expectancy — what you earn per trade
Expectancy = (win% × avg win) − (loss% × avg loss), usually expressed in R. Positive expectancy means each trade, on average, adds value. It's the cleanest one-number summary of whether an edge exists.
The two things people hide
Sample size
20 trades prove nothing — variance alone can produce great-looking results. Demand dozens to hundreds of trades before trusting any stat. Small samples are where fake track records live.
Max drawdown
The deepest peak-to-trough loss. A strategy with a great PF but a 50% drawdown is unholdable for most people. Always ask what it cost emotionally and financially to earn the result.
How we apply this
This is exactly why our public track record logs every actionable call automatically, scores it against a fixed mechanical exit, shows losses, and reports profit factor and net R on a growing sample — no edits after a trade resolves. The point isn't a flashy number; it's a number you can actually trust.
See a track record built this way
Every call logged and scored automatically, losses included, profit factor and net R updated as trades resolve.
View the live Track Record →