I've read many articles on a "profit factor" which is calculated by dividing your total gains by your total losses. From my understanding of it, it pretty much says "how well do you recover from your losers" Or perhaps "if you can manage your losers better your profits can reach greater heights".
There are a couple cases where I can consider the "profit factors" mattering. One being if you have perhaps some sort of systematic trading method, either algo trading, or swing trading. Either way a set of rules that are strictly followed and also trading frequently enough.
But in terms of long term investing it doesn't seem to matter. One article says a profit factor of 3 is unheard of. You can get an exponential profit factor if all of your stocks are profiting just due to the length of time you held them for.
What I want to know if my thoughts are correct. Though I am swing trading and my profit factor is rather high. My profit would be higher if I swung traded less and wasn't so heavily invested in any one stock. The "profit factor" seems to be missing many things to be a viable assessment of a person's trading skills. Anyone who is profiting has a profit factor of at least higher than 1.
Submitted September 02, 2017 at 06:01PM by diff2 http://ift.tt/2x1uTNz
