EA performance metrics: what win rate, profit factor and recovery factor tell you
An EA report shows many numbers. Five matter most: win rate, payoff ratio, profit factor, drawdown and recovery factor. Read them together, never alone.
Quick answer: which EA metrics matter most?
Start with profit factor and maximum drawdown, then check the trade count. A profit factor above 1.0 means profits exceeded losses. Drawdown shows what the gain cost. A high win rate on its own tells you little.
Win rate: the number that fools most buyers
Win rate is the share of trades that closed in profit. Grid and martingale EAs often show 90% or more, because they close many small wins and hold losers open. One bad day can wipe out months of gains. Always read win rate next to the average win and the average loss.
Payoff ratio and expectancy: does the EA make money per trade?
Payoff ratio is the average win divided by the average loss. Expectancy combines it with the win rate:
Expectancy per trade = win rate × average win − loss rate × average loss
Example: win rate 80%, average win +0.5%, average loss −2.5%.
0.8 × 0.5 − 0.2 × 2.5 = 0.40 − 0.50 = −0.10% per trade.
Eight wins out of ten, and the EA still loses money.
Profit factor: profit for every unit of loss
Profit factor is gross profit divided by gross loss. In the example above, 100 trades give 80 × 0.5 = 40% gross profit and 20 × 2.5 = 50% gross loss, so the profit factor is 0.8: below 1.0, a losing system.
Treat a high profit factor on a short record with caution. A few lucky trades inflate it, and it usually drops as the trade count grows. A backtest profit factor is a best case; the live number is the one that counts.
Drawdown: the cost of the gain
Drawdown is how far the account fell from its last high. For grid and basket EAs, floating drawdown (on equity, with trades still open) matters more than closed drawdown, because the losers stay open. Our guide to gold EA drawdown explains the three kinds and how to weigh them.
Recovery factor: gain against pain
Recovery factor is net gain divided by maximum drawdown.
- +30% gain with a 15% maximum drawdown: recovery factor 2.0.
- +30% gain with a 45% maximum drawdown: recovery factor 0.67.
Same gain, triple the pain. Compare EAs on recovery factor, not on gain alone.
Sample size: how much record is enough?
A few weeks or a few dozen trades cannot show the bad days. Markets change: on gold, the average daily range was 0.97% in 2018 and 2.88% in 2008 (XAUUSD daily data). A setting that looks safe in a quiet year can meet days three times wider. Prefer records that include at least one fast, wide market.
Read them together
| Metric | What it tells you | Watch out for |
|---|---|---|
| Win rate | How often trades close in profit | High win rate with large average loss |
| Payoff ratio | Size of wins against losses | Wins much smaller than losses |
| Expectancy | Profit or loss per trade on average | Negative value behind a high win rate |
| Profit factor | Profit for every unit of loss | Very high value on few trades |
| Max drawdown | Deepest fall from a high | Only closed drawdown shown |
| Recovery factor | Gain for each unit of drawdown | Big gain bought with a deep drawdown |
| Trades and time | How much the record has seen | A few weeks or one market type only |
Red flags
- Win rate above 90% while the average loss dwarfs the average win.
- Profit factor from a backtest only, or from fewer than 100 trades.
- No drawdown shown, or closed drawdown only, on a grid or basket EA.
- Gain that includes deposits, or a record with gaps.
Check it yourself
AlgoTrade Connect is a free, read-only EA for MT4 and MT5. It sends your account history to a trading CV that shows time-weighted gain, drawdown and the AT Score (skill, risk, drawdown, tail, consistency), plus insights such as the day or hold time that costs you the most. Add your account.
FAQ
What is a good profit factor for an EA?
Above 1.0 means profits exceeded losses. There is no single ideal number: check it on a long live record, next to drawdown.
Is a high win rate good?
Only if the average loss is not much bigger than the average win. Check expectancy: a 90% win rate can still lose money.
What is recovery factor?
Net gain divided by maximum drawdown. It shows the gain earned for each unit of drawdown.
How many trades before I trust an EA’s numbers?
More is better. A record that has lived through at least one fast, wide market tells you more than a long quiet one.