R / Trade

Analyses - R / Trade

The Risk-Number (R) defines a metric to measure the and each trade outcome can be expressed in terms of the initial risk.

R-Multiple is an outcome metric and you can measure the R-Multiple once the trade has been closed .

The R stands for Risk and each trade outcome can be expressed in terms of the initial risk.

Example

Your initial stop loss was 100 points away from your entry.

If you close the trade for a +250 point return, you made 2.5 times the initial risk. In terms of R-Multiple, that would be +2.5

If you close the trade for a loss at your stop loss (-100 points), then your outcome is -1 R-Multiple

If you close the trade for a loss half-way towards your stop loss (-50 points), the outcome is -0.5 R-Multiple

Basically, you just need to measure your stop loss distance, which provides the R figure, and when you compare it to the final outcome of your trade.