R-multiple normalizes trades so you can compare a $50 scalp with a $5,000 swing trade: both might be +2R. R = profit or loss ÷ initial risk. A trader risking $100 per trade and making $300 profit is +3R, same as a trader risking $1,000 and making $3,000. This is how expectancy works: average R per trade compounds, not average dollars.
- R makes trades comparable across different account sizes and risk levels
- All trading math (expectancy, payoff ratio) uses R
- Dollar profit is psychological; R profit is mechanical
- Win rate means nothing without R; 40% win rate at +2R average is the same as 60% at +1.3R
R-multiple is the secret language traders use to compare trades fairly.
The definition
R = Result ÷ Risk
Risk = Entry price − Stop price (for longs)
Example:
| Trade | Entry | Stop | Risk | Exit | Result | Result/Risk |
|---|---|---|---|---|---|---|
| Stock A | $100 | $99 | $1 | $103 | +$3 | +3R |
| Stock B | $50 | $48 | $2 | $56 | +$6 | +3R |
| Stock C | $200 | $198 | $2 | $206 | +$6 | +3R |
All three trades are +3R, even though:
- Stock A made $3 profit
- Stock B made $6 profit
- Stock C made $6 profit
They're mechanically the same trade.
Why R matters
Without R (comparing dollars):
- Stock A: +$3 (small trade)
- Stock B: +$6 (medium trade)
- Stock C: +$6 (medium trade)
Looks like B and C are better. But they risked more.
With R (comparing risk-adjusted):
- Stock A: +3R
- Stock B: +3R
- Stock C: +3R
They're identical. You're comparing apples to apples.
Know Your Real Risk on Every Trade
TRADZY tracks R-multiples, drawdown and daily loss automatically, so your rules hold when it matters.
Track Risk in TRADZY →R lets you scale
If your setup averages +1.5R, you can apply it to any account size.
$5K account, 1% risk = $50 per trade:
- Risk: $50
- Target: +$75 (1.5R)
- On 100 trades: 100 × $75 = +$7,500
$50K account, 1% risk = $500 per trade:
- Risk: $500
- Target: +$750 (1.5R)
- On 100 trades: 100 × $750 = +$75,000
Same setup, different scale, same edge.
R and different markets
Stock trade: Entry $100, stop $99, exit $103 = +3R
Forex trade: Entry 1.0950, stop 1.0920 (30 pips), exit 1.1040 (90 pips gain) = +3R
Options trade: Entry $5 debit, exit $12, max loss $5, profit $7 = +1.4R
Futures trade: Entry 6,050, stop 6,000 (50 points), exit 6,200 (150 points) = +3R
All are +3R or +1.4R despite wildly different dollar amounts and instruments.
Tracking R over time
Most traders track P&L in dollars. Professional traders track it in R.
Daily journal:
| Date | Ticker | Entry/stop/exit | Result $ | Risk | Result R |
|---|---|---|---|---|---|
| 09/24 | AAPL | $150/$149/$152 | +$200 | $100 | +2.0R |
| 09/24 | SPY | $430/$428/$428 | −$100 | $100 | −1.0R |
| 09/25 | QQQ | $380/$375/$390 | +$400 | $250 | +1.6R |
Your 3-trade series: +2.0R, −1.0R, +1.6R = +2.6R total (net gain across all 3).
Weekly summary: +2.6R on 3 trades = +0.87R per trade.
Monthly summary: Track all 50 trades and calculate average R.
R and expectancy
All expectancy calculations use R.
Example:
- 50 trades
- 18 wins averaging +1.8R each = +32.4R total
- 32 losses averaging −1.0R each = −32R total
- Expectancy = (+32.4R − 32R) ÷ 50 trades = +0.008R per trade
This is barely profitable, but it IS profitable over enough trades.
Compare to dollars:
- Same 50 trades
- Gross wins: $1,620 (avg $90 per win)
- Gross losses: −$960 (avg $30 per loss)
- "I made $660, so I'm profitable!"
But the per-trade profit is tiny: $660 ÷ 50 = $13 per trade. With commissions, you're breakeven or negative.
Using R, you catch this: +0.008R is too small an edge.
R for different trade types
Scalps (5–30 min)
Expect: +0.5R to +1.5R per trade (tight stops, small moves)
Example: Entry $100, stop $99.50, exit $100.40 = +0.8R
Day trades (30 min to close)
Expect: +0.8R to +2.0R per trade
Example: Entry $100, stop $98, exit $104 = +2.0R
Swing trades (days to weeks)
Expect: +1.5R to +3.0R per trade
Example: Entry $100, stop $96, exit $110 = +2.5R
Position trades (weeks to months)
Expect: +2.0R to +5.0R per trade
Example: Entry $100, stop $92, exit $120 = +2.0R (on $8 risk)
Common mistakes with R
Mistake 1: Confusing R with win rate
❌ "I want a 70% R rate."
R is not a percentage. You can't have 70% R.
✅ "I want an average R per trade of +0.5R" or "I want average wins to be 2R and losses −1R."
Mistake 2: Calculating R wrong
❌ R = (Exit − Entry) ÷ Entry
This is percentage gain, not R-multiple.
✅ R = (Exit − Entry) ÷ (Entry − Stop)
Mistake 3: Not tracking R in your journal
If your journal only has dollars, you can't calculate expectancy or see your edge clearly.
Add an R column. It takes 10 seconds per trade.
FAQ
Is negative R bad?
Yes. −1.0R means you lost 1× your initial risk. −0.5R means you lost half your risk. If you're averaging −0.5R per trade, you're losing money.
Can I have a +10R trade?
Yes, but rare. It means the trade moved way more than expected. Example: Stop at $99, exit at $130 on a $100 entry = +3R minimum, but could be +10R if conditions change. Outlier wins often skew expectancy upward, so watch for them.
Should I set targets in R?
Yes, ideally. "I want 2R targets" is clearer than "I want $300 targets" (which depends on account size and risk).
Is R the same as profit factor?
No. Profit factor is total dollars won ÷ total dollars lost. R is per-trade risk adjusted. Different metrics.
How many R per year should I target?
Depends on style: - Day traders: +50R to +150R per year (very difficult) - Swing traders: +50R to +100R per year - Position traders: +20R to +50R per year Most traders make +5R to +20R per year.
What's a realistic average R per trade?
Profitable: > 0 Good: +0.10 to +0.20R Excellent: +0.20 to +0.50R Exceptional: > +0.50R (usually small sample) Target: +0.15R per trade minimum. Below that, edge is weak.
Put This Into Practice
- Set your risk per trade and daily loss limit once
- Track every trade in R, not dollars
- Watch drawdown and expectancy update automatically
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Educational content, not financial advice. Trading involves substantial risk of loss.