R-Multiple is a trade's profit or loss expressed in multiples of the original risk taken on that trade. One R equals the dollar distance from your entry price to your initial stop loss. A trade that closes for a gain equal to twice your initial risk is a +2R trade. A trade that closes at your stop is a -1R trade. R-Multiple is the language professional traders use to compare results across instruments, account sizes, and time periods because it normalizes outcomes to the only thing that was knowable when the trade was taken: the planned risk.
Formula
For a long trade:
R = (Exit Price − Entry Price) / (Entry Price − Stop Price)
For a short trade:
R = (Entry Price − Exit Price) / (Stop Price − Entry Price)
Where Entry Price is the fill price, Exit Price is where the trade was closed, and Stop Price is the initial stop loss set at trade entry (not a trailed stop).
Worked example
You buy EURUSD at 1.0850 with a stop at 1.0820 — a 30-pip risk. You exit at 1.0940, a 90-pip gain.
R = (1.0940 − 1.0850) / (1.0850 − 1.0820) = 0.0090 / 0.0030 = +3R
In dollars, if you risked $100 on this trade, the gain was $300. Same trade on a $1M account risking $10,000 would have produced $30,000 — but the R-Multiple is identical.
Why it matters
Comparing trades in dollars is misleading because account sizes and instrument volatility change. Comparing in R-Multiples lets you evaluate edge across years and across markets on equal footing. Most professional journals — including the Trader+AI journal — track average R per trade as the headline performance figure. Use the R-Multiple calculator to back out R for any historical trade.
Common pitfalls
Traders who move their stop after entry often calculate R against the trailed stop, which inflates the result. Always use the initial stop set at entry — that was the actual risk taken. Also, partial closes complicate R: track each scale-out as its own R figure to keep the math honest.