What is the R multiple and why you should measure your trading in R

The R multiple is a simple idea that changes how you see trading: instead of measuring how much money you make, you measure how many times what you risked you make.

How to calculate it

1R is what you lose if your stop loss is hit. Enter EURUSD at 1.0850 with the stop at 1.0830 and your risk is 20 pips: that's 1R.

Close at 1.0910 (60 pips in your favour) and you made 60 / 20 = 3R. Close at 1.0840 and you lost 10 / 20 = −0.5R. Stopped out: −1R.

Why it beats measuring in money

• It compares trades of different sizes. A 500 win on 1 lot isn't better than a 300 win on 0.3 lots: in R the second may be far better.
• It's independent of account size. Your system works the same on a 5,000 account as on a 200,000 one.
• It separates system quality from position sizing. First make the system win in R; then decide how much to risk.

Expectancy: the most important number

Expectancy is your average result per trade in R. Make 25R over 100 trades and your expectancy is +0.25R: every time you click, on average you make a quarter of what you risk.

With positive expectancy and controlled risk, time is on your side. With negative expectancy, no money-management trick fixes it.

Win rate and R:R go together

The break-even win rate depends on your average R:R: break-even = 1 / (1 + R:R).

• At 1:1 you need over 50% winners.
• At 1:2, over 33%.
• At 1:3, over 25%.

How to start

Always log your stop loss and compute each trade's R. In Katanith it's calculated for you and every analytic (expectancy, profit factor, curves, simulations) can be viewed in R or money. Try our free risk/reward calculator too.