R-multiples explained: results in units of planned risk

An R-multiple is a trade's result divided by the risk recorded before entry, with one R equal to that initial risk amount. A gain of twice that amount is +2R, and a loss of half of it is -0.5R.

A P&L column in currency mixes two things: how the trade went and how large the position was. For illustration, a 40 USDT loss on a small position and a 40 USDT loss on a large one look identical in that column, even if one closed at its planned stop and the other closed long before it. Reading trades of different sizes side by side from currency figures alone is hard.

The sections below cover what 1R means in a record, how to calculate R for long and short trades, what to record so the calculation is possible later, and how to read a set of trades in R, including a neutral definition of expectancy. The R-multiple glossary entry has the short definition, and the R-multiple calculator does the division for a single closed trade.

What does 1R mean in a trade record?

1R is the amount you planned to lose on a trade if it closed at your stop, written down before the entry. It is set once per trade, and every R value for that trade is measured against it.

In the records below, where the quantity is a number of units of the traded asset, the planned risk of a long trade is the distance from the entry down to the stop, multiplied by the quantity. For a short trade, it is the distance from the entry up to the stop, multiplied by the quantity. You can include estimated fees in the planned risk or leave them out. The record should say which, and use the same choice every time.

1R is a unit for reading your own record. It says nothing about what the planned risk should be, and the arithmetic below works the same whatever amount 1R stands for.

Because 1R comes from the planned stop, a trade entered without one has no 1R, and its R-multiple cannot be calculated. Record "no planned stop" in that case, and leave the risk field empty rather than filling in a figure afterwards.

How do you calculate an R-multiple?

You divide the trade's result by its planned risk: R-multiple = result ÷ planned risk. A gain gives a positive R, a loss gives a negative R, and a break-even trade gives 0R.

Here are two hypothetical records, for illustration only. Record A is long, so its result is the exit minus the entry, times the quantity. Record B is short, so its result is the entry minus the exit, times the quantity.

Hypothetical record A (illustration): long ABC-USDT
Entry 50.00   Planned stop 48.00   Quantity 25 units
Planned risk  (50.00 - 48.00) x 25 = 50.00 USDT   (1R)
Exit 53.00    Result (53.00 - 50.00) x 25 = +75.00 USDT
R-multiple    +75.00 / 50.00 = +1.5R

Hypothetical record B (illustration): short DEF-USDT
Entry 10.00   Planned stop 10.40   Quantity 500 units
Planned risk  (10.40 - 10.00) x 500 = 200.00 USDT   (1R)
Exit 10.20    Result (10.00 - 10.20) x 500 = -100.00 USDT
R-multiple    -100.00 / 200.00 = -0.5R

Hypothetical record A closed with a gain of one and a half times its planned risk. Hypothetical record B closed with a loss of half its planned risk. Both figures come from the same division, applied to each trade's own numbers.

What does R show that a currency P&L does not?

R shows each result relative to the risk planned for that same trade, so trades of different sizes can be read on one scale. A currency P&L shows the amount, which depends on both the outcome and the position size.

In the two hypothetical records above, the currency figures show record B's loss (100 USDT) as larger than record A's gain (75 USDT). In R, record A closed at +1.5R and record B at -0.5R. Both readings are correct. They answer different questions: the currency column answers how much the account changed, and the R column answers how each trade went against its own plan.

R suits questions about the plan itself: how often a loss went beyond -1R, how large recorded gains were relative to planned risk, or whether results look different in weeks when position sizes changed. A record can keep both columns side by side.

What should you record so R can be calculated later?

Record the planned risk, the entry, the stop, the quantity and the result for every trade, with the planned risk written before the entry. The field-by-field guide on what to record in a trading journal covers these fields in more detail. For R, a few details matter most:

• Planned risk at entry. Write the amount in your account currency when you enter. If the stop moves later, keep the original figure as 1R and record the move as its own event.
• Gross or net. Decide whether R uses the result before or after fees and other costs, and note it once at the top of the template.
• Partial closes. For a trade closed in parts, add the results of all parts and divide the total by the original planned risk. The R of one part on its own does not describe the whole trade.
• Added size. If you add to a position after the entry, decide how the record handles it, for example a separate planned risk for the added part on its own line, and use the same approach every time.
• No stop. Record "no planned stop" and leave the R field empty.

How do you read a set of trades in R?

You list the R-multiples of a set of closed trades in one column, then read the total, the average and the spread of the values. Here is an illustrative sample of eight hypothetical trades:

Hypothetical sample (illustration only)
Trade 1   +1.50R
Trade 2   -1.00R
Trade 3   -0.50R
Trade 4   +2.10R
Trade 5   -1.00R
Trade 6   -1.30R
Trade 7   +0.40R
Trade 8   -1.00R
Total     -0.80R
Average   -0.80R / 8 = -0.10R per trade

A few things the column shows, as observations about this hypothetical sample only:

• Three of the eight trades closed with a gain and five closed with a loss.
• Three losses closed at exactly -1.00R, the size of their planned risk.
• Trade 6 closed at -1.30R, which is 0.30R beyond its planned risk. In a real record, that line is the one to check against the exit fields and the notes.
• Trade 3 closed at -0.50R, a loss smaller than its planned risk. A close reason field, such as "manual exit", would show how it ended.

None of these is a verdict on the trades. They are questions the record can now answer from its own fields, without relying on memory.

What is expectancy in R, and what does it not tell you?

Expectancy in R is the average R-multiple per trade in a defined sample of closed trades: the total R divided by the number of trades. In the hypothetical sample above, that is -0.80R / 8 = -0.10R per trade. The expectancy glossary entry gives the site's definition of the term.

The figure describes the trades in that sample and nothing beyond them: it is a summary of past records, not a forecast of later trades. It also changes with the sample. For illustration, the first four hypothetical trades above average (1.50 - 1.00 - 0.50 + 2.10) / 4 = +0.525R, and the last four average (-1.00 - 1.30 + 0.40 - 1.00) / 4 = -0.725R. The record is the same, the samples differ, and so do the figures.

An expectancy figure is therefore readable only with its sample stated. Write three things next to it whenever you record one: the date range, which trades were included, and whether R is gross or net.

Which recording habits make R values hard to compare?

R values become hard to compare when the planned risk is rewritten after the trade, when gross and net results are mixed in one column, or when a trade entered without a stop is given a risk figure afterwards. Each one changes a number in the division in a way the record does not show.

• Rewriting 1R after the stop moved. For illustration, a hypothetical trade planned with 50 USDT of risk that closed with a 75 USDT loss is -1.5R. If 1R is rewritten as 75 USDT after the stop was moved, the same loss reads as -1.0R, and the record no longer shows that the loss went beyond the original plan.
• Mixing gross and net. Gross results for some trades and net results for others put two definitions in one column.
• Back-filling planned risk. A risk figure written after the trade for a trade entered without a stop was never part of the plan, so the R it produces describes nothing that was planned.

If any of these has already happened in your record, you do not need to rewrite history. Mark the affected trades, so a later review can include or exclude them on purpose. The article on keeping a trading journal you stick with has a weekly review routine where that check fits.

Your next step

Open your last 20 closed trades and add an R column: for each trade, divide the recorded result by the planned risk written before the entry. Mark every trade that has no planned risk recorded, and write at the top of the column whether it uses gross or net results.