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DrCometh is right; it's a mix of your wins/losses and WHO you won/lost against. Naturally the system will attempt to have you play against people you have a fair chance of winning or losing against (even in placement matches) but if there aren't enough players online and there is an imbalance, that is taken into account (ie. a win against a much better opponent does not count as unfavourably against you).
DrCometh is right; it's a mix of your wins/losses and WHO you won/lost against. Naturally the system will attempt to have you play against people you have a fair chance of winning or losing against (even in placement matches) but if there aren't enough players online and there is an imbalance, that is taken into account (ie. a win against a much better opponent does not count as unfavourably against you).