Popularised by Jack Schwager, the monthly version divides the sum of positive monthly returns by the absolute value of the sum of negative ones. A record with monthly gains totalling 72% and losses totalling 30% scores 2.4.
Schwager's rough guidance: above 1.0 is decent, above 1.5 is good, above 2.0 over a long period is very strong. Because it uses every month rather than only the worst, it is far more stable than any drawdown-based ratio, and because it needs nothing but a return series, it is easy to compute honestly.
It is essentially profit-factor applied to time periods instead of trades, and comparing the two is instructive. A strategy with a high trade-level profit factor but a weak gain-to-pain ratio is winning often in small amounts and losing in clusters, which is a warning about return-skew that trade statistics alone will not show.
Related: profit-factor, omega-ratio, return-skew, sharpe-ratio