R-Multiple

An R-multiplemeasures a trade’s outcome in units of the risk you took on entry. 1Requals the distance from your entry price to your stop-loss - that’s the maximum you planned to lose. A winning trade that made three times that distance is a +3R trade. A loss that hit your stop is exactly −1R.

For a long trade: R = (exit − entry) ÷ (entry − stop). For a short: R = (entry − exit) ÷ (stop − entry). The denominator is always positive - it’s the risk you committed to when you placed the trade.

Why pros measure trades in R, not rupees

R-multiples normalize across position size. A ₹2,000 win on a small test position and a ₹20,000 win on a full position can both be +2R trades if the stops were sized proportionally. That lets you compare a tiny crypto futures trade with a large NIFTY options position - the rupee amounts differ wildly, but the R-multiples are directly comparable.

System R-multiple = your edge in one number

If you log R-multiples for every trade and average them, you get the average R-per-trade of your system. A system with +0.4R average and 100 trades a year produces 40R of net profit. If 1R is 1% of your account, that’s 40% annual return. The math is agnostic to which markets you trade.

R requires a planned stop

You can’t compute R without a stop-loss recorded at entry. Traders who “decide in the moment” can’t produce R-multiples - which is why R is the cleanest signal that a trader has an actual system. No stop, no R, no system.