What is R-multiple?
R-karrali (R)
In short
A trade's result measured in units of initial risk: result ÷ (entry − stop). A stopped-out trade is −1R; a profit of twice the risk is +2R.
Also known as: R, 1R
An R-multiple measures a trade's result not in dollars but in units of initial risk. 1R is the amount you lose if the stop-loss is hit. The result is divided by that unit:
- 1R (per share) = Entry − Stop
- Result (R) = (Exit − Entry) ÷ (Entry − Stop)
A stopped-out trade is −1R, a gain of twice the risk is +2R, and a loss cut before the stop might be, say, −0.5R.
Why R and not dollars
Is a $500 profit a lot or a little? If $250 was at risk, it's +2R — a very good trade. If $2,000 was at risk, it's only +0.25R. R lets you compare trades of different sizes and different-priced stocks on one scale, and your statistics stay meaningful as the account grows.
How it's used
- Record each trade's R result in your trading journal.
- Compute the average R — that is your expectancy.
- Compare planned R:R with actual results: "I plan +3R but exit at +1.2R on average" reveals an early-exit habit.
Limitations
R only makes sense when the stop is set in advance. Without a stop, 1R is undefined. If price gaps below your stop, the loss can exceed −1R (say −1.6R) — record the real number.
Entry $40, stop $38 → 1R = $2 a share. 25 shares → $50 at risk. Exit $46: (46 − 40) ÷ 2 = +3R = +$150.
Example
Entry $50, stop $48 (illustrative). 1R = $2 per share; with 100 shares 1R = $200.
- Exit at $54: ($54 − $50) ÷ $2 = +2R (+$400).
- Stopped at $48: −1R (−$200).
- Closed manually at $49: ($49 − $50) ÷ $2 = −0.5R (−$100).
Ten trades: four at +2R, one at +3R, five at −1R. Total: 8 + 3 − 5 = +6R, an average of +0.6R per trade. With $200 risked each time, that's about +$1,200. The win rate is only 50%, yet the result is positive.
Mistakes and tips
Log R alongside dollars — once your account size changes, only R results are comparable.
Keep 1R at the same dollar amount on every trade (for example 1% of the account); the position size calculator helps with that.
If you widen the stop mid-trade, 1R changes and your statistics break. Stops only move in the direction of profit.
Frequently asked questions
- How do you calculate an R-multiple?
- Divide the difference between exit and entry by the difference between entry and stop. Entry $50, stop $48, exit $54 gives 4 ÷ 2 = +2R.
- How much should 1R be?
- Many traders set 1R at roughly 0.5–2% of the account. The key is that it's small enough to survive a long losing streak.
- How do I record R if my stop gapped through?
- Use the actual result: if a $48 stop filled at $46.80 instead, that's (46.80 − 50) ÷ 2 = −1.6R.
Learn it in the Academy
This term is covered with hands-on examples and a quiz in these lessons of the interactive course.
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