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Why measure your results in R

A $300 gain can be an excellent trade or a poor one. It all depends on what you risked to get it. R says it in one number.

What an R is

An R is the amount you risk on a trade: the loss you would take if your stop were hit. If you risk $100, one R is $100.

Each trade's result is then expressed in R: a $250 gain is +2.5 R, a $100 loss is −1 R, a $50 loss because you exited before the stop is −0.5 R.

Why it is fairer than amounts

Amounts depend on the size of your account and on your risk at the time. A trader who moves from $50 to $200 of risk per trade will see gains quadruple without having become any better. In R, nothing changes: the way they trade is still measured on the same scale.

R also lets you compare accounts of different sizes, a $5,000 live account and a $100,000 funded account, or periods when your risk was not the same.

Reading your expectancy

Expectancy is the average R per trade. An expectancy of +0.3 R means each trade earns you, on average, 30% of your risk.

It reads together with the win rate. A 40% win rate can be very profitable if your wins average 2.5 R: 0.4 × 2.5 − 0.6 × 1 = +0.4 R per trade. Conversely, 70% winning trades are not enough if wins average only 0.3 R and losses 1 R.

The condition: record your risk

R only exists if the risk is recorded when the trade is taken. A trade with no risk entered cannot be expressed in R, and skews your average if you estimate it afterwards, once you already know the result.

The simplest way: decide your risk before entering, with the position size calculator, and write it in your journal at the same moment.

In My Trading Book

Each trade carries its planned risk. Statistics show total R, average R per trade and the equity curve in R, and flag trades with no risk entered, which R figures leave out rather than guess.