An R-multiple expresses a trade's profit or loss as a multiple of the initial dollar risk ("1R") rather than as a raw dollar amount or percentage — a +2R trade made twice what it risked; a -1R trade lost exactly the planned stop-loss amount.
"1R" is defined as the dollar amount risked on a single trade — the distance from entry to stop-loss, multiplied by position size. Expressing every trade's outcome as a multiple of its OWN 1R (rather than a raw dollar figure or a percentage of the current account) makes trades of very different sizes directly comparable: a $50,000 position that made $5,000 and a $500 position that made $50 are both simply "+1R" if each risked the same 1R at entry, even though the dollar amounts differ by 100x.
The risk/reward ratio on a trade plan IS its planned R-multiple target: a plan built around a 2:1 risk/reward ratio is targeting +2R if the take-profit level is reached, while the worst planned outcome (the stop-loss firing) is exactly -1R by definition — that's the whole point of sizing the stop-loss BEFORE entry. Realized R-multiples across many closed trades (not just the planned ones) are what a track record should report, since they reveal the actual distribution of outcomes rather than only the plan.
A trader who wins the large majority of trades but loses -5R on the rare miss and gains only +0.5R on wins can still lose money overall — win rate alone hides this. Tracking the AVERAGE R-multiple across all closed trades, alongside win rate, is what actually reveals whether a strategy has a positive expectancy over time.
The trade made twice its own initial planned risk (1R) — for example, a trade that risked $500 to the stop-loss and closed $1,000 ahead is a +2R outcome, regardless of the position's total dollar size.
R-multiples normalize for position size, making trades of very different dollar sizes directly comparable — a large and a small position that each risked the same fraction of planned risk and produced the same multiple of that risk are equivalent in R-terms even though their dollar profits differ.
No — a strategy needs both a healthy average R-multiple AND a high enough win rate for the two to combine into a positive expectancy. A large average R-multiple built on a very low win rate can still be a losing strategy overall.
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Educational research only — not investment advice.