An R-multiple expresses a trade's result as a multiple of its initial risk. If you planned to risk $200 and made $600 after costs, the result is +3R. If you lost $150, the result is -0.75R.
R makes trades with different prices and position sizes comparable. It also connects each result to the risk you accepted before entry.
The R-multiple formula
For a long trade:
R-multiple = (exit price - entry price) / (entry price - initial stop price)
For a short trade:
R-multiple = (entry price - exit price) / (initial stop price - entry price)
Use the initial stop, not a stop moved later. That preserves the original 1R denominator. Include brokerage, fees and slippage in the final profit or loss when you evaluate a real trade.
Four worked R-multiple examples
The securities below are fictional and the numbers are hypothetical.
1. Winning long trade
- Entry: $42.00
- Initial stop: $40.00
- Exit: $48.00
- Units: 500
Risk per unit is $42.00 - $40.00 = $2.00. Profit per unit before costs is $48.00 - $42.00 = $6.00.
R-multiple = $6.00 / $2.00 = +3.0R
Initial dollar risk is $1,000 and gross profit is $3,000. If total trading costs were $40, net profit would be $2,960, or +2.96R.
2. Losing long trade with the stop hit
- Entry: $25.50
- Initial stop and exit: $24.00
- Units: 300
Risk per unit is $1.50 and the loss per unit is $1.50.
R-multiple before costs = -$1.50 / $1.50 = -1.0R
Initial risk is $450. With $20 in costs, the net loss is $470, or -1.04R. A stop order defines the planned exit, but gaps and slippage can produce a loss below -1R.
3. Partial long loss before the stop
- Entry: $8.20
- Initial stop: $7.60
- Exit: $7.85
Risk per unit is $0.60. The loss per unit is $0.35.
R-multiple before costs = -$0.35 / $0.60 = -0.58R
The smaller loss does not prove the early exit was good. Compare a series of discretionary exits with the outcomes your written stop rule would have produced.
4. Winning short trade
- Short entry: $55.00
- Initial stop: $57.50
- Cover price: $49.00
Risk per unit is $57.50 - $55.00 = $2.50. Profit per unit is $55.00 - $49.00 = $6.00.
R-multiple = $6.00 / $2.50 = +2.4R
For a short trade, the stop sits above entry and profit comes from covering below entry. Borrowing costs and other fees should reduce the realised result.
How partial exits change the result
Calculate the weighted average exit, or calculate the profit from each parcel and add it.
Suppose you buy 200 shares at $20.00 with a stop at $19.00. Initial risk is $1 per share, or $200. You sell 100 shares at $21.00 and 100 at $23.00.
- First parcel: 100 x $1 profit = $100, or +0.5R for the full trade risk
- Second parcel: 100 x $3 profit = $300, or +1.5R for the full trade risk
- Total: $400 / $200 = +2.0R before costs
The weighted average exit is $22.00, which gives the same result. Subtract all entry and exit costs before dividing by the original $200 risk.
That partial-exit example is a manual net-R review because it subtracts costs. Swingfolio's saved-trade R is price-based and keeps recorded fees in net P&L; the Swingfolio R calculation guide explains that boundary and its weighted partial-exit calculation.
Why R is more useful than dollar P&L alone
Compare two hypothetical trades:
| Trade | Dollar result | Initial risk | R-multiple |
|---|---|---|---|
| A | +$500 | $2,000 | +0.25R |
| B | +$300 | $150 | +2.0R |
Trade A made more money, but Trade B earned more for each dollar placed at risk. R does not replace dollar P&L, account return or maximum drawdown. It answers a narrower question: how large was the outcome compared with the trade's planned risk?
Build an R-distribution
A single result says little about a strategy. A distribution shows how often losses exceeded plan, whether small wins dominate and whether a few large winners carry the results.
Here is a hypothetical 50-trade sample:
| R range | Trades | Share of sample |
|---|---|---|
| Below -1.5R | 3 | 6% |
| -1.5R to below -1R | 8 | 16% |
| -1R to below -0.5R | 7 | 14% |
| -0.5R to below 0R | 4 | 8% |
| 0R to below +0.5R | 6 | 12% |
| +0.5R to below +1R | 8 | 16% |
| +1R to below +2R | 9 | 18% |
| +2R to below +3R | 3 | 6% |
| +3R and above | 2 | 4% |
Investigate the three losses below -1.5R. They may reflect gaps, slippage, moved stops or data errors. Then review the six small winners. If early profit-taking repeatedly removes the chance of larger wins, the journal should show it.
Do not label an R-distribution good or bad from a generic benchmark. Trend-following and mean-reversion strategies can have different shapes and both can be profitable. Judge the distribution with win rate, sample size, drawdown and costs. The average R and sample-size guide shows how raw mean, median and winsorising change that interpretation.
Calculate expectancy in R
Expectancy estimates the average R produced per trade in a sample:
Expectancy = (win rate x average winning R) - (loss rate x average losing R)
Assume 45% of trades win, the average winner is +2.1R and the average loser is -0.8R:
Expectancy = (0.45 x 2.1) - (0.55 x 0.8) = +0.505R per trade
That result describes the sample, not the next trade or 100 future trades. A 1% planned risk also does not translate perfectly into a 0.505% account return because account size changes, costs vary and gaps can exceed the stop. To test other win rates and average R values, the expectancy and win rate calculator runs the same formula.
Use the free R-multiple calculator
The R-multiple calculator accepts direction, entry price, stop loss and exit or target price. It returns R-multiple, initial risk per share and profit or loss per share. Add the optional share count to see dollar risk and P&L. Add account size as well to see position risk as a percentage of the account.
For the unit count before entry, use the position size calculator guide. Position sizing defines the dollars in 1R. The R-multiple measures what happened to that risk.
Turn R into a review habit
Record the initial stop before entry, every partial exit and all trading costs. Then compare R by strategy and setup over enough trades to expose a pattern.
Swingfolio keeps trade plans, exits and performance review together. That lets you move from a single calculator result to questions such as whether one strategy contains losses better or whether early exits reduce average winning R.
Start the 30-day trial and turn planned risk and realised R-multiples into a repeatable Swingfolio review.