R-Multiple in Trading: What 1R Means, With Examples

1R is the amount you risked on a trade, and an R-multiple is the result divided by that amount. A trade that makes twice what it risked is +2R, one stopped out at the planned stop is −1R, and one closed at entry is 0R. Because R is a ratio, a $500 account and a $50,000 account can be compared trade for trade.

How to work out 1R

Risk in money = stop distance × position size × value per pip. Rearranged, the size that makes 1R a chosen amount is: size = money you will risk ÷ (stop distance in pips × value per pip). With made-up inputs, a long at 1.1000 with a stop at 1.0950 has a stop 50 pips away. Risking $100 at $10 a pip per standard lot gives 100 ÷ (50 × 10) = 0.20 lots, and from here on 1R = $100 for this trade. The lot size calculator does the same sum for your own symbol and account currency. Sizing decides what 1R is; the R-multiple only reads the result against it.

One trade, six exits

These are made-up prices on the trade above, to show how the same risk turns different exits into R. This is arithmetic, not advice.

The last row is the one to notice. A stop is a planned loss of 1R, and a fill beyond it makes the real loss a little bigger: here −1.10R. Recording the real R, not the planned one, is what lets slippage show up in your average.

The same trade recorded three ways

Say the price runs to 1.1050 (+50 pips). You close half the position there, move the stop to entry, and the other half is stopped at 1.1000. In money: half of 0.20 lots is 0.10 lots, so the first half makes 50 × $10 × 0.10 = +$50 and the second makes $0. Three ways to write that down give three different pictures.

• Against the first stop is the usual choice: the result in money ÷ the money at risk when you entered, +$50 ÷ $100 = +0.50R. One decision, one number.
• One trade per half doubles the trade count and the R: each half risked $50, so the first earns +1.00R and the second 0R, summing to +1.00R against +0.50R for the same money. R measured on different bases does not add up, so a total taken across legs overstates the trade.
• Against the moved stop breaks, because the risk left is zero and the division has no answer. A moved stop changes the risk from that point on; it does not change what you risked when you took the trade.

Rules that keep your R honest

1. Fix 1R at entry: money at risk = distance to the first stop × size. Write it down before the trade opens.
2. Record the result in money, then divide. Do not estimate R by eye from the chart.
3. Keep one R figure per decision. If you scale out, add the legs in money and divide once, as in the first method.
4. Count costs in: spread, commission and swap come off the result before you divide.
5. Say which stop you meant if you widen one. A stop widened after entry is a larger real risk than the number you wrote down.

What R cannot tell you

• It says nothing about whether 1R was the right amount. A run of +2R trades risking half the account is still reckless; R describes the result relative to the risk, not the risk itself.
• It is only as clean as your first stop. A mental stop, or one placed after the fact, makes every R figure soft.
• It needs a stop to exist. A trade with no stop has no defined 1R. Record the amount you would have accepted losing, and be consistent about it.

The same R values feed the expectancy sum and the profit factor; with them in hand, win rate against risk-reward is a single line of arithmetic.

We're working on a free journal and a backtester, with no date yet. Today Trepeat is a trade copier for MT4, MT5 and cTrader, currently on demo accounts, and you can add notes, a grade and screenshots to any copied trade once it closes, with a calendar of your results.

The journal's R:R field holds what you planned, not the R the trade ended up with. It exports to Excel (.xlsx) and does not calculate R-multiples today, so divide the result by the risk in a spreadsheet, as above. See the journal documentation; the glossary defines the terms used here.

Written by the Trepeat team.