R-multiple = (exit − entry) ÷ (entry − stop) for a long, and (entry − exit) ÷ (stop − entry) for a short. A long bought at 100 with the stop at 95 and sold at 112 made 12 ÷ 5 = +2.40R. Expectancy is the average R a trade: win rate × average winner − loss rate × average loser, or simply the total R ÷ the number of trades.
Planned reward to risk: +2.00R at the target.
| Trades | 10 |
| Won / lost / scratch | 4 / 6 / 0 |
| Win rate | 40% |
| Average winner | +2.33R |
| Average loser | −0.92R |
| Total | +3.80R |
| Expectancy | +0.38R a trade |
R measures a result in units of the risk you took. A trade stopped at its original stop is −1R, whatever the price or the position size; one that makes twice its risk is +2R. That makes trades on a $5 stock, a forex pair and gold directly comparable, and it is why serious records are kept in R rather than money. Always measure from the ORIGINAL stop: moving the stop later does not change the risk the trade was taken with.
| Trade | Entry | Stop | Exit | R |
|---|---|---|---|---|
| Long | 100 | 95 | 112 | +2.40R |
| Short | 1.2500 | 1.2560 | 1.2410 | +1.50R |
| Long, stopped | 100 | 95 | 95 | −1.00R |
The short risked 0.0060 (60 pips) and made 0.0090 (90 pips), so 90 ÷ 60 = +1.50R.
Results: +2.4, −1, −1, +1.8, −1, +3.1, −0.5, −1, +2, −1. That is 4 winners averaging +2.33R and 6 losers averaging −0.92R, a total of +3.80R, so the expectancy is +3.80R ÷ 10 = +0.38R a trade. Check: 0.4 × 2.33 − 0.6 × 0.92 = +0.38R.
A positive expectancy means the method earns over enough trades; the larger the sample, the more it means. To see what a good R profile looks like on a real, published record, with every loser left in, read what a good R-multiple is. The R-multiple guide explains the unit in depth.
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Get this week’s setupsDivide the profit or loss on the trade by the initial risk. For a long: (exit − entry) ÷ (entry − stop). Bought at 100, stop 95, sold at 112: 12 ÷ 5 = +2.4R.
Anything reliably above zero after costs earns over enough trades. Small positive figures add up over a large sample; a figure from twenty trades can mislead.
The original stop. That is the risk the trade was taken with; measuring from a stop moved into profit would make every trailed winner look bigger than it was.
Risk-reward is planned before the trade, from the target. The R-multiple is the result after the trade, from the exit. A 3R target that is closed early might bank +1.5R.