R-multiple: trade result in units of initial risk

What is an R-multiple

An R-multiple is the profit or loss of a trade divided by the amount you planned to risk on it when you opened it.

"R" stands for that initial risk. It is the money you would lose if price hit your original stop-loss. A stop-loss is the order that closes a losing trade at a set price.

Formula

Use these letters:

• E: entry price
• S: initial stop-loss price
• X: exit price

For a long (buy) trade:

R-multiple = (X − E) / (E − S)

For a short (sell) trade:

R-multiple = (E − X) / (S − E)

In both cases, the bottom line of the formula is the initial risk per unit. The top line is the actual result per unit. Because position size cancels out, the R-multiple compares trades of different sizes on the same scale.

Worked example (hypothetical)

A trader buys at price E and places the stop at price S below it. The distance from E down to S is the risk, R.

• Price hits the stop. The loss equals the full initial risk. The result is written as negative R.
• The trade closes above entry. The profit is measured against the same distance. If the profit distance is three times the stop distance, the R-multiple is three.
• The trade closes between entry and stop. The result is a fraction of negative R.

To get exact money values for your own position size, use the tools on our calculators page.

Where the term appears

• Trading journals and spreadsheets. Traders log each trade's R-multiple to compare results across instruments and position sizes.
• Backtest and performance reports. These often show average R per trade, also called expectancy. Expectancy is the mean R-multiple over a series of trades.
• Trading books and education material. R-multiples are common when discussing position sizing and risk management.

MetaTrader 4 and MetaTrader 5 report results in money and points. They do not label trades with R-multiples, so traders usually calculate R themselves from the trade history. See platforms and apps for platform basics.

R-multiple vs risk-reward ratio

The risk-reward ratio is planned before the trade. It compares the distance to the target with the distance to the stop.

The R-multiple is the realised result after the trade closes. A trade planned with a large reward can still end at negative R.

Edge cases for experienced traders

• Slippage. If price gaps through the stop, the loss can be larger than R.
• Moving the stop. R is always based on the initial stop. Moving the stop to breakeven does not change R. If you redefine R after entry, the statistics become misleading.
• No stop-loss. Without an initial stop, R is undefined. Some traders use a planned maximum loss instead, but this must be fixed before entry.
• Costs. Decide whether R-multiples include spread, commission and swap, and apply the same rule to every trade.
• Partial closes and scaling in. Weight each part by its size. For scaling in, measure against the total risk of the combined position.

A good average R in past data does not guarantee future results. Leveraged CFD and forex trading can lose money fast, including more than the risk you planned if the market gaps.

Related terms

• Risk management
• Equity curve
• Exposure
• Trading psychology
• Trading strategies
• Trading glossary

Frequently asked questions

What does R mean in trading?

R is the initial risk on a trade: the amount you would lose if the original stop-loss is hit.

Is the R-multiple the same as risk reward R?

No. Risk-reward is the planned ratio before entry. The R-multiple is the actual result after exit, measured in units of R.

Can an R-multiple be worse than negative R?

Yes. Slippage, gaps or costs can make the loss larger than the planned risk.

Do I need software to track R-multiples?

No. A spreadsheet with entry, initial stop and exit prices is enough to apply the formula.