An R-multiple expresses a trade's result as a multiple of how much you risked, rather than as a raw dollar amount. If you risk $100 on a trade (that's "1R") and it closes for a $300 profit, that trade is a +3R result. Lose the full amount risked, and it's -1R. R-multiples let you compare trades of completely different sizes on the same scale.
The R-Multiple Formula
R-Multiple = Trade Profit or Loss ÷ Initial Risk Amount (1R)
Your 1R is simply the dollar amount you risked on that trade — the distance from your entry to your stop loss, multiplied by your position size. Every outcome is then measured against that number.
A Worked Example
You risk $150 on a trade (1R = $150). It closes for a $450 profit. R-Multiple = $450 ÷ $150 = +3R. On a different trade, you risk $80 and lose it entirely: R-Multiple = -$80 ÷ $80 = -1R. Both trades are now directly comparable on the same scale, even though the dollar amounts involved were completely different.
Why R-Multiples Matter When Your Position Size Changes
If you size positions differently across trades — a common and often correct practice as your account grows or as conviction varies — raw dollar P&L makes trades hard to compare. A $500 win on a large position might represent a smaller edge than a $200 win on a small one. Converting every trade to an R-multiple removes position size from the comparison entirely, leaving just the quality of the trade relative to the risk taken.
R-Multiples and Expectancy
Expectancy is often expressed in R rather than currency for exactly this reason — an expectancy of +0.4R per trade means, on average, you make 0.4 times your risk amount per trade, regardless of how much you actually risked on any individual trade. That makes expectancy comparable across different account sizes and different periods where position sizing changed.
How to Use R-Multiples in Practice
Review your trade history in R rather than dollars when you're evaluating a strategy or setup, not just your account performance. A setup that averages +0.6R per trade is a well-defined edge you can trust and repeat, in a way that "this setup made me $340 last month" simply isn't.
Every Trade, Measured in R Automatically
LedgerPips calculates R-multiples for every synced trade automatically, so you can compare setups and sessions on equal footing — regardless of how your position sizing changed along the way.
Conclusion
R-multiples strip position size out of the equation, leaving a clean, comparable measure of how good a trade actually was relative to its risk. Use them to evaluate setups and strategies, not just your raw account balance.
