R-Multiple
R-multiple is the ratio of profit or loss to your initial risk per trade, expressed in units called 'R'. A 1R trade means you risked $100 and made $100 profit. It standardizes trade outcomes for direct comparison regardless of position size.
In depth
R-multiple represents how many times your initial risk amount you gained or lost on a single trade. Your risk (R) is the distance between entry and stop loss. If you enter at $50 with a $48 stop loss, your R is $2 per share. A 2R profit means you earned twice that amount, or $4 per share total.
This framework lets traders measure performance consistently. Two traders risking different amounts can compare results objectively. One trader risking $500 and gaining $1,000 achieved 2R. Another risking $200 and gaining $400 also achieved 2R. Both made identical trade quality decisions despite different capital allocations.
Calculating R-multiple is straightforward: divide profit or loss by risk per unit. If you risked $300 on a trade and gained $750, that's a 2.5R winner. If you lost $150, that's a -0.5R loser. Over 20 trades, you might average 0.8R per trade. Multiply by trade count: 20 trades × 0.8R equals 16R total gain. This metric isolates decision quality from luck or timing.
Why it matters
R-multiple separates position sizing from trading skill. A large position that loses money might show as a -$2,000 loss. But if you risked $4,000, that's only -0.5R, actually a disciplined small loss. Without R-thinking, traders confuse big money moves with good decisions.
Profitable traders track average R-multiple per trade and winning percentage together. If you win 40% of trades at 2.5R average and lose 60% at -0.8R average, your math works: (0.40 × 2.5) + (0.60 × -0.8) = 1.0 - 0.48 = positive expectancy. This is how edge exists. R-multiple reveals whether your system actually works before risking serious capital.
TraderLog's trade journal captures entry, exit, and stop loss prices automatically, calculating R-multiple instantly for every trade. You see each trade's R-value immediately without manual math. Over dozens of trades, TraderLog aggregates your average R-multiple and win rate together.
This dashboard view shows real performance quickly. You identify which setups consistently deliver 1.5R+, and which drain -1R repeatedly. Traders refine strategy using R-multiple data, not gut feelings. Export reports break down R-multiple by market, time of day, or trade type to optimize where you focus energy.
Frequently asked questions
Profit percentage depends on your entry price and position size. A $10 stock gaining $2 is 20% return on that stock. But R-multiple depends only on risk amount. If you risked $1 per share and made $2, that's 2R regardless of stock price. R-multiple is cleaner for comparing trades across different assets and account sizes.
There's no single target. A professional trader with 50% win rate might average 1.2R per trade, yielding positive expectancy. A trader winning 35% of trades needs 2.5R average to stay profitable. Focus on your personal win rate and average loss. If wins exceed losses by 2-3 times in R terms, you have an edge.
Yes, R-multiple works on any timeframe. Day traders, swing traders, and long-term investors all benefit. The only requirement is a defined stop loss before entering. Without a predetermined risk level, you can't calculate R accurately and you're gambling, not trading with an edge.
Track R-Multiple in your trading journal.
TraderLog calculates R-Multiple automatically across your trade history, and shows you exactly when and why it changes.