R-Multiples Explained: How To Measure Every Trade In R

You closed the week up a few hundred dollars and felt fine about it. Then you scrolled back through the trades and saw one winner carried everything, while a couple of losers cost more than you ever planned to lose. Your dollar total couldn't tell you that. Your R column can.

R-multiples turn every trade into the same unit, so you can judge your execution instead of your account balance.

What R Actually Means

R is the amount you planned to lose on a trade if your stop was hit. For a stock, it's the distance from entry to stop, times the number of shares. For options and futures, you also multiply by the contract multiplier.

The R-multiple of a closed trade is simple:

R-multiple = profit or loss ÷ initial risk.

If you risked $100 and closed with a $250 profit, that trade was +2.5R. If you risked $100 and lost $100, it was -1R. The expectancy lesson uses this same idea when it calls a 1:2 trade "2R."

Calculating R On One Trade

Say you buy 100 shares at $25.00 with a stop at $24.00. Your risk is $1.00 a share, so R is $100.

• You sell at $27.50. Profit is $250, so the trade is +2.5R.
• You get stopped out at $24.00. Loss is $100, so the trade is -1R.
• The stock gaps down and your stop fills at $23.40. Loss is $160, so the trade is -1.6R.

That third line matters. A loss bigger than -1R means something happened that your plan didn't allow for: a gap, a slow exit, or a stop you moved. Our stop order vs stop-limit breakdown covers why a stop can fill worse than its price.

Why R Beats Dollar P&L

Dollars mix two things together: how well you traded and how big you traded. R separates them.

A $300 win on a trade where you risked $300 is +1R. A $150 win on a trade where you risked $50 is +3R. The first trade put more money in the account, but the second was the better trade. If you only look at dollars, you'll copy the wrong one.

R also lets you compare trades across account sizes and across months. A -1R loss on a $10,000 account and a -1R loss on a $50,000 account are the same quality of loss, even though the dollar amounts are very different.

Ten Trades, Measured In R

Here's a hypothetical run of ten trades, already converted to R:

+2.0, -1.0, -1.0, +3.0, -1.0, +0.5, -1.0, -1.6, +2.0, -1.0

Add them up and the total is +0.9R. Now break it down:

• Wins: 4 of 10, a 40% win rate.
• Average win: (2.0 + 3.0 + 0.5 + 2.0) ÷ 4 = 1.875R.
• Average loss: (1.0 + 1.0 + 1.0 + 1.0 + 1.6 + 1.0) ÷ 6 = 1.1R.
• Expectancy: (0.40 × 1.875) - (0.60 × 1.1) = 0.75 - 0.66 = +0.09R per trade.

If R was $100, that's an average of $9 per trade before costs. Positive, but thin.

Now look at the one -1.6R loss. If it had been a clean -1R, the total would have been +1.5R instead of +0.9R, and expectancy would have been +0.15R per trade. One oversized loss cut the result of the whole sample by 40%. That's the kind of thing a dollar total hides and an R column shows in seconds.

And the +0.5R winner? Worth a second look. If you closed it early out of nerves rather than at your planned target, that's money your plan earned and your hands gave back.

Ten trades is a tiny sample. Treat it as a reason to keep logging, not a verdict on your strategy.

Four Things Your R Column Tells You

Once every trade has an R-multiple, run these checks every week:

• Losses beyond -1R: note the reason for each one. Gaps are a sizing question. Moved stops are a discipline question.
• Average win in R: if it keeps landing well under your planned target, you're cutting winners short.
• R by setup: total R for each setup tells you which ones carry your results and which ones just keep you busy.
• R by day of the week or time of day: a pattern here can point to the sessions where you trade tired, rushed or bored.

None of this needs fancy software. It needs a planned stop on every trade, written down before entry, so R exists to measure against.

Join The Pod and get the R column without the spreadsheet. The private trade journal calculates the R-multiple, win rate, expectancy and profit factor for every trade you log, the Expectancy Calculator in the toolkit shows what your numbers add up to over a long run, and Lesson 5 teaches you to read them. Join The Pod monthly and start measuring your next trade in R.