what is considered a good profit factor

Discussion in 'Trading' started by diversions, Apr 24, 2010.

  1. I am trying to evaluate my own performance. As I am about to start managing some ones account.
    Trade station gives me all sorts of fancy read outs. The one that makes sense to me is profit factor
    I am wondering what is considered a solid number. So I can know in good faith I am worthy of managing the account.
  2. You aren't considering enough things and you shouldn't base your trading on a single variable like that.

    frequency * net profit factor = % return

    If you're managing money you'll need to think about peak to through drawdowns, scalability, whether the strategy is market neutral or has a directional bias (is it just long stocks?)

    Has the strategy survived bear markets, liquidity crunches (august 2007) etc...

    Profit factor is like a car racer looking at his gas tank gauge. If there is gas in the tank, good, but are you going in the right direction?....