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The Profit Factor is calculated as:
Profit Factor=Gross Profit / Gross LossProfit
Factor=Gross LossGross Profit?
A Profit Factor > 1 means the EA is profitable (profits exceed losses).
A Profit Factor < 1 means the EA is losing money (losses exceed profits).
| Profit Factor | Interpretation |
|---|---|
| Below 1.0 | The EA is losing money (avoid). |
| 1.0 - 1.5 | Barely profitable (high risk, needs improvement). |
| 1.5 - 2.0 | Decent performance (can be profitable with good risk management). |
| Above 2.0 | Very good (consistent profitability). |
| Above 3.0 | Excellent (highly profitable strategy). |
Drawdown (%) – Measures risk (lower is better).
Win Rate (%) – Percentage of winning trades (e.g., 60%+ is good).
Expectancy – Average profit per trade.
Number of Trades – A high-profit factor with very few trades may be unreliable.
A good EA should have a Profit Factor of at least 1.5 or higher.
Above 2.0 is considered strong.
Balance Drawdown – The percentage drop in your account balance from its highest point (peak) to its lowest point (trough) due to losing trades.
Example: If your account reaches $10,000 (peak) but later drops to $7,000, the drawdown is 30%.
Maximal (Max) Drawdown – The largest recorded drawdown in the EA's trading history, indicating the worst-case loss experienced.
Risk Assessment – Helps you understand the EA's risk level. A high max drawdown means the EA could significantly deplete your capital.
Aggressive EAs – May have 30-50%+ drawdown (high risk, high reward).
Moderate EAs – Should stay below 20-30%.
Conservative EAs – Often aim for <10% (e.g., grid hedging or low-risk scalpers).
Strategy Reliability – A well-designed EA should keep drawdown controlled (e.g., below 20-30% for most traders).
Psychological Impact – Large drawdowns can lead to emotional trading or abandoning the strategy prematurely.
