An R-multiple expresses a trade's result as a multiple of the amount you risked. Your risk on a trade is 1R. If the trade makes twice that risk, it is a +2R winner. If it hits your stop, it is a -1R loss. R turns messy dollar and pip figures into one clean, comparable unit.
How R works
Suppose you risk $100 on a trade - that is your 1R. The outcomes translate directly:
- Make $200 -> +2R
- Make $50 -> +0.5R
- Lose $100 (full stop) -> -1R
- Lose $40 (closed early) -> -0.4R
R-multiple = Trade profit or loss / Amount risked
Notice the account size and pip count vanish. Whether you traded a 12-pip stop or an 80-pip stop, a +2R result means the same thing: you made twice what you were willing to lose.
Why professionals think in R
Raw pips lie because stops differ. A 40-pip winner on a 10-pip stop (+4R) is far better than a 40-pip winner on a 60-pip stop (-0.67R at the point it was measured). Dollars lie too, because they change with account size and position size. R strips both away and leaves only the thing that matters: reward relative to risk. It also detaches you emotionally - a "-1R" reads as a normal cost of business, while "-$430" reads as pain.
R turns a strategy into one number
Average the R-multiples of every trade in a sample and you get expectancy in R - the average return per trade as a fraction of risk. An expectancy of +0.3R means each trade, on average, returns just under a third of what you risked. Multiply by how many trades you take and you have a clean projection of edge, completely independent of account size.
Important: R only works if your risk is genuinely fixed at 1R per trade. If you size positions inconsistently, the R scale breaks. This is exactly why position sizing that holds dollar risk constant is the foundation everything else sits on.
Using R in your reviews
When you journal in R, patterns jump out. You can see that your +3R runners all came from one setup, or that a cluster of -1R losses all happened in one session. Grouping R results by setup and session is how you find which parts of your trading actually pay. R makes those comparisons fair because every trade is measured against its own risk, not against an arbitrary pip or dollar figure.
Let the tool track R for you
You do not need to compute R by hand for every trade. When you backtest in a simulator, risk is auto-sized to a fixed percentage and each trade is recorded with its R result, so your whole history is already in R when you sit down to review it. That lets you read expectancy, best and worst R, and setup-by-setup performance without a spreadsheet.
R-multiples FAQ
What is an R-multiple in trading?
The result of a trade expressed as a multiple of what you risked. 1R is your risk, +2R is twice your risk in profit, and -1R is a full stop-out.
Why do traders use R instead of dollars or pips?
R normalizes trades with different stop sizes and account balances, so a +2R result means the same thing on any trade and keeps focus on risk.
How do you calculate an R-multiple?
Divide the trade's profit or loss by the amount risked. Risk $100, make $250, and the trade is +2.5R.