learn/glossary/r-multiple

R-multiple

Intermediate
An R-multiple expresses a trade's result in units of its initial risk, so a trade that made twice what it risked is +2R and one that hit its stop is −1R, regardless of the dollar amounts.
Key facts
1RThe amount you risked on the trade
+2RMade twice your risk
Why use itCompares trades of any size
RelatedExpectancy, position sizing

The idea

R turns every trade into the same unit. Instead of comparing a $50 win to a $500 win, you compare a +1R to a +2R, which strips out how big the position happened to be and shows how good the trade actually was. Your stop defines 1R, so a trade risking $100 that makes $250 is +2.5R whether your account is a thousand dollars or a million.

Why traders think in R

Thinking in R makes results comparable and expectancy easy to read: a system that averages +0.4R per trade is doing well no matter the account size. It also keeps sizing honest, because once risk is one unit, a string of losses is measured in Rs you planned to lose rather than dollars that feel random. R is the common language behind expectancy and consistent position sizing.

Related terms
ExpectancyPosition sizingDrawdown

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R-multiple - Trading Glossary | TradeDNA