Trading Glossary
An R-multiple expresses a trade's result as a multiple of the amount you originally planned to risk, instead of as a dollar figure or a percentage. "1R" is your initial risk per share: the distance between your entry price and the stop-loss price you planned before entering. A trade that made twice its planned risk is a +2R trade. A trade that lost exactly what you planned to risk is a -1R trade. A trade that lost more than planned, because of slippage or a widened stop, shows up as worse than -1R.
1R equals the distance between your entry price and your original stop-loss price. Your result per share is your exit price minus your entry price on a long trade, or your entry price minus your exit price on a short trade. Divide that result by 1R and you get the trade's R-multiple. Enter $50, stop at $48, exit at $56: 1R is $2, the result is $6, and the trade is +3R.
R-multiples matter most in aggregate. A strategy's expectancy, the average result you can expect per trade over a large sample, is usually expressed in R rather than dollars: win rate multiplied by average winning R, minus loss rate multiplied by average losing R. A system with a 40% win rate and an average winner of 3R against an average loser of 1R still has a positive expectancy, even though it loses more often than it wins, because the size of the wins relative to the losses is what actually decides whether a strategy makes money over time.
Traders log the R-multiple of every closed trade in their journal instead of, or alongside, the dollar result, so that a $50,000 account and a $5,000 account produce a directly comparable track record. It also makes stop discipline visible: if your journal shows a trade at -1.8R when your plan calls for a hard stop at -1R, that gap is the tell that a stop got moved, ignored, or filled with unusual slippage.