Is a higher profit factor indicative of a good EA?

Profit factor is calculated by dividing total profit by total loss“An indicator to see whether the EA can make a profit”. If profits exceed losses during the measurement period, the profit factor becomes 1 or higher, so it is not very useful in measuring an EA’s performance. No matter how good the profit factor is, if the recovery factor discussed later is low, the performance of that EA is often not good.

The figure below shows the same EA, but with the profit factor intentionally manipulated. To prevent other information from leaking in, part of it is concealed, but which one looks like a better EA?

The actual backtest results are as shown below. The left EA would have 21 trades over 18 years, averaging about 1 trade per year. However, the profit factor is3.34, which could be mistaken as an excellent EA based on the numbers. On the other hand, the right EA trades about 800 times over 18 years, averaging about 44 trades per year. Compared to the left, the graph is much nicer, but even so, the number of trades is quite low.which can be called an over-optimized EA, and the profit factor is1.66, a relatively high figure.

In other words, neither EA is suitable for use. An appropriate profit factor value is around1.2～1.5. Some excellent EAs exist even when the profit factor exceeds1.5, but the guideline is to assess it by combining recovery factor, backtest period, and number of trades in a holistic manner..It is important to judge them in a comprehensive way.