R-Multiple
Definition
An R-multiple expresses a trade's outcome in units of the initial risk taken. If you risk $100 (the 'R') and win $200, that's a +2R trade; lose the full risk and it's −1R. R-multiples normalise trades across different position sizes and let you compute expectancy in standardised units regardless of account size.
Formula
R = |\text{Entry} - \text{Stop}| \times \text{LotSize} \times \text{PipValue}R = |entry price − stop-loss price| × position size × pip value
In-depth: R-Multiple
R-multiples solve a fundamental problem in trade evaluation: comparing trades across different position sizes and account sizes. Without normalisation, a $500 win on a $50,000 account is the same as a $50 win on a $5,000 account, but raw dollar comparisons obscure this. R-multiples express both as their R equivalent.
Formal definition: R is the initial risk per trade in account currency, computed as |entry price − initial stop-loss| × position size × pip value. The R-multiple of a trade outcome is the realised P&L divided by R. A −1R trade lost exactly the planned risk; a +3R trade won 3× the planned risk.