Subtle & customizable audible cues to indicate when charts turnover, plus world clocks for any market — by & for professional traders
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Subtle & customizable audible cues to indicate when charts turnover, plus world clocks for any market — by & for professional traders
Open the appGuidance last reviewed 2026-08-19
R is the amount you put at risk on a trade — the distance from your entry to your stop, multiplied by your size. An R-multiple is any outcome expressed in those units.
It is the simplest idea in trading analytics and the one that changes the most, because it separates two things that dollar P&L welds together: how good the trade was, and how big you traded it.
| What R is | Entry to stop, in money. Defined before the trade |
| Why it matters | Makes trades comparable across time and account size |
| Position sizing | Choose risk per trade, and size follows arithmetically |
| What it exposes | Moved stops, size creep, revenge sizing |
| Where it fails | Trades with no defined stop |
You decide to buy at 50.00 with a stop at 48.50. Your risk per share is 1.50. You buy 200 shares.
R = 1.50 × 200 = $300
That trade's R is $300. Every outcome now has a natural unit:
| Outcome | Dollars | R-multiple |
|---|---|---|
| Stopped at 48.50 | −$300 | −1R |
| Sold at 53.00 | +$600 | +2R |
| Sold at 50.75 | +$150 | +0.5R |
| Panicked out at 49.40 | −$120 | −0.4R |
| Gapped through the stop, filled 47.70 | −$460 | −1.53R |
⭐ That last row is the whole argument for R in one line. In dollars it is "a $460 loss", indistinguishable from a slightly bigger position. In R it is −1.53R — a loss half again as large as the one you agreed to take. Something went wrong, and only the R column says so.
🔴 R must be decided BEFORE you enter. Working it out afterwards from where the trade went is not measuring risk; it is describing the outcome and calling it a plan.
It makes your own history comparable. A $200 win in your first month, on a $5,000 account, and a $2,000 win last week on $50,000 are the same trade. In dollars the early ones look trivial and the recent ones look like progress. In R they sit side by side, and you can finally see whether you are actually trading better or just trading bigger.
It removes account size from every statistic. Expectancy in dollars tells you what you made per trade at the size you happened to be using. Expectancy in R tells you what the method is worth — a number that survives you doubling your account.
It makes the distribution readable. Lay out every trade as an R-multiple and the shape of your trading appears: a cluster near −1R, a cluster of small wins, and however many large winners there are. That picture answers questions no summary statistic can — and it is the input SQN is built from.
Once results are in R, sizing becomes arithmetic rather than judgment.
Position size = (account × risk per trade %) ÷ risk per share
A $40,000 account risking 1% is $400 per trade. If the stop is 1.60 away, that is 250 shares. If the stop is 0.40 away, it is 1,000 shares. Same risk, very different position — which is the point. The market decides where the stop belongs; the arithmetic decides the size.
⚠️ This is the inversion most people need. The instinct is to pick a size and see where the stop lands. Doing it the other way makes every trade cost the same when it fails, which is what makes a string of losses survivable.
Common conventions put risk per trade at 0.5%–2%. That looks timid until you connect it to drawdown:
| Risk per trade | 10 consecutive losses cost |
|---|---|
| 1% | ~10% |
| 2% | ~18% |
| 5% | ~40% |
| 10% | ~65% |
A run of ten losses is unremarkable for a method winning 45% of the time — it will happen. At 1% it is an annoyance; at 5% it is a 40% hole needing a 67% gain to fill. ⚠️ These are conventions rather than findings, and the right figure depends on your win rate, your dispersion and what you can actually sit through.
Moved stops. Losses arriving at −1.4R and −1.8R when the plan said −1R. This is the single most common leak in a trading record and dollar P&L cannot show it, because a bigger loss looks identical to a bigger position.
Size creep. If your R has been quietly growing, dollar results improve while nothing about the method has. Tracking R alongside R-multiples separates the two.
Revenge sizing. Look at the R of the trade immediately following your worst losses. If it is consistently larger than average, that is a behavior, and it is visible after a handful of trades rather than needing hundreds.
Cut winners. Compare exit R against MFE in R. Trades that regularly reach +2R and close at +0.7R point at a rule that needs changing rather than at discipline.
⭐ All four are visible in a small sample, because you are counting rather than estimating — see how many trades before the numbers mean anything.
Trades without a defined stop. Some approaches genuinely do not have one — long-term positions, certain options structures, anything sized by conviction. R is not applicable there, and inventing one afterwards is worse than leaving the column empty.
Options and defined-risk structures. Risk may be the whole premium, in which case R is the debit paid and most outcomes fall between −1R and some cap. That is legitimate but the distribution looks nothing like a stop-based one, so ⚠️ do not mix the two in the same statistics.
Scaling in and out. A position built in three entries with a moving stop has no single R. Conventions exist — initial risk on the first entry is common — but they are choices, and the number means only what your convention says.
Gaps and slippage. A stop is not a guarantee. Beyond −1R results are real and should be recorded honestly rather than rounded back to plan.
| Term | Meaning |
|---|---|
| R | Money risked on a trade — entry to stop, times size |
| R-multiple | A trade's result divided by its R |
| Risk per share | The per-unit distance from entry to stop |
| Fixed fractional sizing | Risking a constant percentage of the account |
| Expectancy in R | Average R-multiple across all trades |
| MFE | The best point a trade reached while open |
| Slippage | The gap between the price you wanted and the one you got |
R is the unit the better measures are built on. Expectancy, SQN and the honest version of drawdown all read more clearly in R than in currency.
For everything else a journal reports, see Trading Performance Metrics Explained.
Position sizing percentages are widely used conventions rather than findings, and the right figure depends on the method and the person trading it.
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