R-multiples: measuring trades in units of risk
What an R-multiple is, how to calculate it from planned risk, and why measuring results in R makes trades of different sizes and instruments comparable.
· 4 min read
An R-multiple expresses a trade’s result as a multiple of the amount you planned to risk on it. If you planned to risk ₹5,000 and made ₹10,000, the trade was +2R. If you lost ₹5,000, it was −1R.
Why R instead of rupees
Rupee P&L mixes two things: how good the trade was and how big it was. A ₹2,000 gain on a small position and a ₹2,000 gain on a large one are not the same achievement. R removes size from the comparison, so an options trade, an equity trade and a crypto trade can sit side by side.
Calculating it
- Decide your planned risk before entry — usually the distance to your stop multiplied by quantity, plus expected costs.
- After the trade, divide the net result by that planned risk.
- Average R across trades is your expectancy in units of risk.
What R reveals
Losses much larger than −1R mean stops were moved, skipped or gapped through. Winners that rarely exceed +1R suggest exits are early relative to the risk being taken. Neither is visible in rupee P&L alone.
R only works if planned risk is recorded. TradeDrift has a planned-risk field on every trade, and whether it was filled in is one of the checks in the behaviour score.
Educational content only. Nothing here is investment advice or a recommendation to trade any instrument.
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