Profit Factor

[Xela]

It's very clear to me, there's no room for interpretation

We all share that perspective (apart from Henry). Each is a precisely defined term.

am I missing something?

Just the fact that apparently Henry (unaccountably) imagines that many traders don't really distinguish between "win-rate" and "PF".

“When I use a word,’ Humpty Dumpty said in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’ ’The question is,’ said Alice, ‘whether you can make words mean so many different things.’

(Lewis Carroll)

 

[henry76]

So the meaning of words are set in stone , wicked!

 

[Xela]

So the meaning of words are set in stone , wicked!

I don't think they always are, at all (far from it, actually) - but the extent to which they have precisely defined meanings clearly depends on social context, and within groups that have their own jargon and interpretations, the participants effectively become habituated to those meanings.

In trading circles, "profit factor" is a statistical/mathematical term that's certainly precisely defined, with at least 99% of the participants in such communities using it in exactly the same way, by almost universal - albeit tacit - agreement, with exactly the same mutually understood frame of reference.

I'm not suggesting there's anything "right" or "wrong" about that, but that's undeniably "the way it is", Henry.

There's no law against someone having their own, abnormal way of working out a "Sharpe ratio", either, but it's not going to be one that anyone else understands in the contexts within which it's discussed. It's exactly the same with win-rate and profit factor: in trading circles, "they mean what they mean".

 

[henry76]

Like I said , wicked

 

[henry76]

I think you mean 99% of people who agree with you use it the same way you do , but that is not the average person in the street , if you asked them , they're answer to what is win % would be very similar to the answer they would give to the question what is profit factor.
P.S. when you say trading circles , you sure you don't mean losing trading circles , too much time worrying about money management et all, you want to get yourself away from these circles and make some money.

 

[Xela]

that is not the average person in the street

We're not in the street, though, Henry: we're in a trading forum.

As I explained at some length (perhaps too much length!), agreed meanings are context-dependent.

It's not my fault that it's so, but it is so - and the issue has taken up enough of my time, now, even if not yet quite enough of yours.

Wicked ...

 

[Vixyup]

Thank you all for your answers, they are all very informative. There seems to be some real interest around this topic making an excellent and heated diacussion... I welcome and appreciate any further input.

 

[henry76]

agreed meanings are context-dependent.

Only if they're agreed , which they are not, I would have thought that was obvious.

 

[fordewind]

Work on entries and reduce your leverage.All you need.

 

[henry76]

Agreed , entries are key , it's the time you really get to choose exact criteria , exits by their nature tend to have less exacting criteria.