Risk · 7 MIN READ
R-Multiple: Compare Trades Using the Risk You Accepted
Learn how R normalizes different position sizes and turns trade outcomes into a comparable measure of execution.What 1R represents
Before a trade, define the amount you are prepared to lose if the idea is invalidated. That amount is 1R. If planned risk is $40, a $72 net gain is +1.8R and a $20 loss is −0.5R.
Because R is relative to planned risk, it lets you compare a small stock position with a larger forex or crypto position without confusing account size with trade quality.
Use net results and deliberate risk
For a closed trade, calculate R from the final net result after fees where those fees are included in your journal. Use the risk that was actually planned before entry—not a convenient number chosen after the result is known.
If risk changes through partial entries or stop adjustments, record the reason. The calculation is only as trustworthy as the risk definition behind it.
What R cannot tell you
A positive R does not prove that a decision was disciplined. An impulsive trade can win. Likewise, a clean execution can finish at −1R. Review the result beside rule adherence, context, and sample size.
Normalize two trades with different sizes
Trade A risks $40 and earns $72 net. Trade B risks $120 and loses $60 net.
- Trade A: divide $72 by $40 to get +1.8R.
- Trade B: divide −$60 by $120 to get −0.5R.
- Compare the outcomes in R rather than concluding that the larger dollar movement was automatically more important.
- Check whether both planned-risk amounts were recorded before entry.
Trade A added 1.8 units of its accepted risk; Trade B lost half of its accepted risk. R makes the outcomes comparable without erasing the underlying dollar impact.
Put the idea into your process
- Using the stop distance in price instead of the account amount planned at risk.
- Ignoring fees when net P&L includes them elsewhere.
- Replacing planned risk with realized loss after the trade.
- Treating a high R winner as proof that its entry followed the rules.
- Record planned account risk before entry.
- Use net closed-trade result consistently in the numerator.
- Calculate R only for trades with a trustworthy risk value.
- Review R beside adherence and strategy, not as a standalone score.
Prompts to use in your journal
- What was 1R before entry?
- Did fees or slippage materially change the outcome?
- Did execution improve or damage the planned payoff?
Real instruments may require contract, tick, pip, currency-conversion, tax, or venue-specific adjustments. TradeNarra does not provide investment advice, recommend trades, or promise outcomes.