What is an R-multiple in trading?
In one line: An R-multiple is a trade's result divided by the amount risked on it. Risk $50 and gain $100, and the trade made 2R.
How it works
R is your planned risk on a trade: the amount you lose if the Stop loss is hit.
R-multiple = result ÷ R
Three simple examples
Say you risk $50 on each trade. That's 1R.
- Trade A gains $120. 120 ÷ 50 = +2.4R.
- Trade B hits the stop and loses $50. −1R.
- Trade C gaps past the stop and loses $75. 75 ÷ 50 = −1.5R.
Trade C shows why R is useful. You planned to lose 1R and lost 1.5R. The Slippage is easy to spot.
Why it matters
R puts every trade on the same scale.
A $200 win on a $1,000 risk is 0.2R. A $200 win on a $50 risk is 4R. Same dollars, very different trades. R shows which was the better decision.
It also makes your journal work across account sizes. If you move from practice to a small live account, your R numbers still compare cleanly. That's why our trading journal guide logs every result in R.
Add up your R results, divide by the number of trades, and you have your Expectancy.
A common mistake
Moving the stop after entry, then measuring R from the new stop. If you widen the stop from $50 to $100 of risk and the trade wins $100, that's 1R against the new stop, but you took twice the risk you planned.
Always measure R from the original stop. That keeps the numbers honest.
Write your R in dollars before you enter. If the planned loss feels too big, the size is too big. The position size calculator fixes that.
Questions
What does 1R mean in trading?
1R is the amount you planned to risk on one trade, the loss if your stop is hit. A 2R win made twice that amount.
Who came up with R-multiples?
The idea was made popular by Van K. Tharp in his books on trading and position sizing.
Is R the same as the risk-reward ratio?
Close, but not quite. The Risk-reward ratio is the plan before entry. The R-multiple is the result after exit.
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