R-multiples: measuring trades by risk
R is the amount you risk on a trade: the distance from your buy price to your stop-loss, times the number of shares. Every result is then measured in R.
An example
You buy at ₹500 with a stop at ₹480. Your risk is ₹20 a share, so 1R = ₹20 a share.
| Exit price | Profit per share | Result |
|---|---|---|
| ₹480 (stop) | -₹20 | -1R |
| ₹530 | +₹30 | +1.5R |
| ₹550 (target) | +₹50 | +2.5R |
Why it is better than rupees or percent
- It compares different trades fairly. A 3% gain on a calm stock and a 3% gain on a wild stock are very different achievements. In R they are measured against the risk actually taken.
- It keeps position size out of the result. Whether you bought 10 shares or 1,000, a stop is -1R.
- It makes expectancy easy. If your average trade is +0.3R and you risk ₹1,000 per trade, you make about ₹300 per trade on average over many trades.
How this site uses it
Every backtest and track-record number is in R after costs. A target hit is about +1.67R (target 2.5 ATR ÷ stop 1.5 ATR); a stop is about -1R, a little worse when the price gaps through the stop. An average result below 0R means the method lost money over many trades.