R is your initial risk on a trade: the distance from entry to stop, times the size, times the contract value. An R-multiple is the trade's result measured in that unit. Risk $150 and make $300, and the trade is +2R. Lose the full stop, −1R. Cut the loss halfway to the stop, −0.5R.

Formula

R (risk) = |entry − stop| × size × contract value
R-multiple = net result / R

Example

You buy 2 NQ contracts at 18,000 with a stop at 17,990. NQ is worth $20 per point.

Step Calculation Result
Risk 10 points × 2 × $20 $400
Exit 18,025, net of $10 commission +$990
R-multiple 990 / 400 +2.48R

Why traders use R

  • It makes trades comparable. +1.5R on gold and +1.5R on NQ are results of the same quality, whatever the account size.
  • It exposes sizing and stop problems. A loss of −2.3R on a trade planned at −1R means the stop was moved, ignored or slipped badly. See moving the stop and slippage.
  • It keeps expectancy stable as the account grows.

The one requirement

R needs the initial stop. If you trade without a stop, or record only the stop you moved to later, there is no R, only money. Record the stop you had when you entered, even if you moved it afterwards.

In SetupBook

When you enter prices, a stop and a size, the trade form computes the risk and the R-multiple; with no prices you can type the risk amount yourself. The trades table has an R column, Analytics shows the R distribution from −3R to +5R in half-R steps, and expectancy in R feeds the trader score. Trades without a risk stay out of every R metric instead of being guessed.