R-Multiple
Risk Management
What it means
Expressing profit or loss as a multiple of the amount risked. It makes every trade comparable regardless of size.
Example
You risk $100 on a trade (entry $100, stop $95, 20 shares). You exit at $115 for a $300 profit -- that is a +3R trade. A loss to the stop is -1R.
Mistake beginners make
Beginners measure results in dollars, which makes small-account trades look "worse" than large-account trades. R-multiples let you compare strategy quality regardless of account size.
Related terms
- Risk-Reward Ratio — How much you risk on a trade compared to how much you aim to make. A 1:3 ratio means you r…
- Expectancy — The average amount you expect to make per trade, accounting for both wins and losses. A po…