Topic: Profit Factor
One of the metrics in the generator and also in the repository is 'Profit Factor'
Sometimes people may want to get an understanding as to how it is derived.
There is an excellent article in a pdf file located here http://www.priceactionlab.com/Literatur … bility.pdf
The design of FSBPro is excellent for research in the metrics that Popov has installed.
I often let the generator 'go wild' and develop systems and then I sort the results by the different metrics. Often something interesting will appear.
Be sure to take advantage of these metrics tools, they are also in the optimizer and are most useful in converting what looks to be a discard into something that may be quite worthwhile.
For example, today I got something that looks quite interesting in that it has a nice equity curve....... PF of 2.22 and SQN of 2.76.. the bad news is the win/loss ratio... 0.28. I will load that into the optimizer and see if that lovely tool will sort on 'win/loss' and improve that number. there may be a strategy for me to develop further. There is a lot I can do with this thing. And all the tools are in the optimizer, the logic slots, and the generator.... and of course the editor.
Sooooooo doing some research using the generator, I have a potential profitable system that uses only two opening logic slots, and the opening and closing slots, a nice tidy little system to start to work with.
Personally I prefer a profit factor closer to 3 and higher, reason being, profit factor does nott reveal that you can have a string of losing trades as soon as the strategy starts trading, the higher the number then the better the odds of winning.
Profit Factor does not reveal that one or two trades could be all the profit and the other 165 can be losers. We have to perform the due diligence.