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General TradingR
Recovery Factor
A performance metric that measures how effectively a trading system recovers from drawdowns, calculated by dividing the net profit by the maximum drawdown. A higher recovery factor indicates a more robust and resilient trading strategy.
Example
“A trading system with $50,000 in net profit and a maximum drawdown of $10,000 has a recovery factor of 5.0, indicating it earned five times its worst peak-to-trough loss.”