R-multiple
An R-multiple is a trade's result divided by what you risked to open it. Risk 200 and make 600, and the trade is +3R. The unit makes trades of different sizes, instruments and accounts comparable, which they are not in money terms. Run this calculation now: a trading journal that is actually good for something
An R-multiple expresses each trade's result in units of the risk taken. It is the unit that lets trades of different sizes belong to the same average.
What 1R is, and where it comes from
1R is the money the trade put at risk the moment it was opened: distance from entry to stop, times position size. With 5 lots of EURUSD and a 20-pip stop, 1R is 1,000 dollars. That number is born before the trade and does not change afterwards.
The R-multiple is the result divided by 1R. Closed 600 up on a 200 risk: +3R. Stopped out: −1R. Scratched at breakeven: 0R. There is no conversion to make and no scale to pick — the unit is already in the trade.
Why money does not compare and R does
A 300 profit on a trade risking 1,000 is +0.3R. A 150 profit on one risking 100 is +1.5R. In money the first looks twice the second; in R it is worth a fifth. Judging your own history by the statement means comparing numbers that are not about the same thing.
That is why R is the unit in which a history becomes a statistic. Evaluation accounts, funded accounts and live accounts have different sizes; measured in R, all three enter the same average, and the strategy stays assessable even when capital changed along the way.
Expectancy is exactly the mean of the R-multiples. Without the unit it has nothing to average — which is the dependency that puts this term before that one, not after.
The mistake that inflates every journal: recomputing R
The most common mistake is recomputing 1R after moving the stop. Risk 200, move the stop to breakeven, then call the new risk — nearly zero — 1R, and any gain turns into a huge number. Every R-multiple in the history goes up, and none of them is true.
The rule is deliberately rigid: 1R is the risk at the moment of opening, written down before the result is known. Moving the stop changes the risk still running, not the unit the trade will be measured in.
The same holds for a position added to mid-trade. If the position doubled after entry, the trade's R is the total risk actually exposed, not that of the first tranche.
A loss bigger than 1R is the signal that matters
A losing trade should cost −1R. When −1.4R or −2R shows up, what was measured is not a wrong read of the market: it is a gap, slippage, a stop set too wide, or a stop that was not honoured. Four different causes, and none of them is fixed by studying the strategy.
So it is worth splitting losses into two lists before any average: those that cost up to 1R, which are the normal price of trading, and those beyond it, which are execution failures. Mixed together they become a poor expectancy nobody can trace.
In a prop account the difference decides the account. Two −2R losses in one day consume what the plan reserved for four trades, and it is the daily limit that ends the account, not the month's average.
FAQ
Is an R-multiple the same as risk-reward?
No. Risk-reward is planned, before the trade: target divided by stop. The R-multiple is realised, after it: result divided by risk. A 3:1 plan closed halfway is +1.5R.
How do I compute 1R across several instruments?
Always in money, never in points or pips. Distance to the stop times the value of the point times position size. Converting to money is what lets an index trade be compared with a forex one.
How many trades before the number means anything?
There is no magic number, and anyone promising one is guessing. What can be said is the opposite: below a few dozen trades the average in R is dominated by luck, and treating it as the strategy's result is the costliest mistake of anyone starting to measure.