What is an R-Multiple?
R-Multiple
Forex Trading Glossary
Quick Answer: An R-multiple expresses a trade outcome as a multiple of the initial risk, making performance comparisons consistent across markets and strategies.
What is an R-Multiple?
An R-multiple expresses a trade’s result as a multiple of the initial risk. If you risk 1R (say 50 pips) and bank 150 pips, the trade is a +3R winner regardless of instrument or timeframe.
Benefits of R-Based Tracking
- Normalized performance: R removes volatility from position sizing so you can compare trades apples-to-apples.
- Expectancy insights: Summing R outcomes quickly reveals whether the strategy has a positive edge.
- Psychology support: Thinking in R helps you embrace small losses and hold for larger gains.
Build an R Distribution
Log every trade’s R value. The pattern of small losses and occasional big winners proves your system works even when the win rate looks mediocre.
Putting R to Work
- Define risk precisely before entry using stop distance and position sizing.
- Set target areas in R terms (e.g., scale at +2R, trail at +3R) to systematize exits.
- Group results by setup type to discover which ideas deliver the strongest R multiples.
- Use R to communicate performance with investors without revealing actual dollar figures.
Related Terms
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