R is the amount you stand to lose if your stop loss is hit, fixed when you enter. Dividing the final result by R turns every trade, whatever its size or market, into the same unit. A full stop-out is −1R, a trade closed at break-even is 0R, and a trade that reaches a target three times the stop distance is +3R.
Example
You buy 20 SOL at $150 with a stop at $145, so R = 20 × $5 = $100. You sell at $162.50 for a $250 profit: +2.5R. The next week you risk $300 on a BTC trade and lose $150 by exiting early: −0.5R. In R, the two trades can be added and compared directly: +2R in total.
Why it matters
Dollar results mix up skill and position size. Measured in R, your journal shows whether your exits are good, whether you cut winners short and what your expectancy is. Most performance statistics, from expectancy to profit factor, are easier to read in R.
Common mistake
Moving the stop after entry and then calculating R from the new stop. R must be fixed at entry from the original stop. Otherwise your losers look smaller than they were, and your statistics flatter you.
Put it into practice
- Free toolPnL & R-multiple calculatorWork out gross and net PnL of a long or short after maker and taker fees, the ROE on your margin at any leverage and the trade's R-multiple.
- Free toolExpectancy & R-multiple calculatorTurn your win rate and average win and loss into expectancy per trade, the break-even win rate and profit factor. Plus the R-multiple of any single trade.
- In FlowsenseTrading journalPlan before each session and review after it, with every synced trade, its R and your notes in one place.
FAQ
- Can a loss be bigger than −1R?
- Yes, when slippage, a gap or a missing stop makes you lose more than planned. Losses beyond −1R are worth tracking separately because they point to execution problems.
- Should fees be included in R?
- Track net R, after fees and funding, if you want your statistics to match your account. With tight stops, fees can take a large share of each R.
- What is a good average R per trade?
- That average is your expectancy. Any positive value over a large sample means the strategy makes money; many traders consider +0.2R to +0.5R per trade solid.