Trading glossary
R-Multiple
R-multiple is the ratio of a trade's profit or loss to the initial risk taken, where 1R equals the amount you risked on the trade. A trade that profits by exactly your initial risk is +1R, and one that hits your stop is -1R. Expressing results in R lets you compare trades of different sizes fairly and evaluate a system by its average R. Traders and prop firms use R-multiples to measure whether a strategy has an edge independent of position size. In Traders Vault, R-multiple is derived from your entry, stop and exit and shown per trade and as a distribution over time.
What is R-Multiple in trading?
R-multiple is the ratio of a trade's profit or loss to the initial risk taken, where 1R equals the amount you risked on the trade. A trade that profits by exactly your initial risk is +1R, and one that hits your stop is -1R. Expressing results in R lets you compare trades of different sizes fairly and evaluate a system by its average R. Traders and prop firms use R-multiples to measure whether a strategy has an edge independent of position size. In Traders Vault, R-multiple is derived from your entry, stop and exit and shown per trade and as a distribution over time.