If you want to improve your trading, you have to analyse your day's trading to identify flaws in your trading. To do this, there are a few statistical tools which enable you to evaluate the quality of your trades. One of the simplest and most effective tools is Profit Factor.

Definition of the Profit Factor
Profit Factor is an index of trading skills. It evaluates with a figure the relation between risk taken and results.
If your trading results are good, your Profit Factor will be higher than 2. Below this figure, you need to review your trading, even if you are making profits. In fact, a Profit Factor lower than 2 shows that the risks you take to increase your capital are too high. In the medium term, a trader with a Profit Factor lower than 2 is statistically doomed, the risks being too high to make a profit. This means that, at some point, losses will take the lead and that you will not have the ability to recover. With a Profit Factor greater than 2, your losses are covered

How is Profit Factor calculated?

Profit Factor is calculated very simply: you add up all your winning trades and divide them by all your losing trades:

Profit Factor = (sum of earnings) / (sum of losses
. Profit Factor and risk management

Profit Factor is therefore a powerful risk management tool that is often used by Hedge Funds to assess traders. The general philosophy of these Hedge Funds is high yield with minimum risk. We need to adopt this philosophy in our personal trading: so, it is better to make an average of €200 per day, with a Profit Factor of 3 (making an average of €300 for every €100 loss) than €400 per day with a Profit Factor of 2 (making €200 on average for every €100 loss)!!!

Yeah. Your calculations and advice are very right. When I've been a new trader I was always thinking about the profit and this was on the first place for me. The first question was to find a platform where to trade. I've started to look for some platforms in google. I found the DaxRobot. Firstly, I didn't know about this platform and I've read some DaxRobot review from https://forexreviewz.com/daxrobot-review/ because I wanted to be sure in. Step by step I've started to earn more and more and I recommend not to be afraid to start trading.

jaminson:
Yeah. Your calculations and advice are very right. When I've been a new trader I was always thinking about the profit and this was on the first place for me. The first question was to find a platform where to trade. I've started to look for some platforms in google. I found the DaxRobot. Firstly, I didn't know about this platform and I've read some DaxRobot review from https://forexreviewz.com/daxrobot-review/ because I wanted to be sure in. Step by step I've started to earn more and more and I recommend not to be afraid to start trading.

Could you tell me some more information about it? Let’s talk in PM