What is R in trading?

Short answer: 1R is your risk on the trade, the distance from entry to the initial stop. A trade's result in R is the move from entry divided by that distance. Hit the stop and you lose 1R; exit at twice the stop distance in your favour and you make +2R.

The formula

1R = |entry − initial stop| R multiple = (exit − entry) ÷ 1R for a long R multiple = (entry − exit) ÷ 1R for a short on the account = R multiple × percent risked

A long, worked through

Buy BTC at 76,600 with the stop at 74,700. The distance to the stop, 1,900, is 1R. If the trade is closed at 82,000, the move is 5,400, which is 5,400 ÷ 1,900 = +2.84R. If the stop had filled at 74,700, the result would be −1R. Risking 1% of the account, +2.84R is +2.84% on the account, whatever the size of the position.

A short, worked through

Sell ETH at 3,000 with the stop at 3,100: 1R is 100. Close at 2,830 and the trade made 170, which is +1.70R. Close at 3,050 and it lost 50, which is −0.50R: a loss, but only half of what was risked, because it was cut before the stop.

Partial exits

A partial is a share of the whole position, so its R counts in proportion. Take half off at +2R and close the rest at +4R, and the trade made 0.5 × 2 + 0.5 × 4 = +3R. Close the second half at breakeven instead and the trade made 0.5 × 2 + 0.5 × 0 = +1R.

Always measure from the initial stop

1R is fixed when the trade is opened. Moving the stop to breakeven later protects the trade, but it does not change what was risked at entry, so the R is still counted against the original stop. Measuring from a moved stop makes every result look bigger than it was.

Why traders count in R

• It compares trades of any size. A $50 win on a small position and a $500 win on a big one can both be +2R. R says how well the trade was managed, not how big it was.
• It shows the edge. Average your results in R and you have your expectancy: what a typical trade earns for every unit risked. Work yours out with the expectancy calculator.
• It makes risk honest. Results in leveraged return on margin can look enormous. R, and R times the percent risked, cannot be inflated by leverage.

What does 1.5R or 2R mean in a target?

A 2R target is a price twice as far from the entry as the stop, in your favour. With a 1,900 stop distance on that BTC long, 2R is 76,600 + 3,800 = 80,400. A setup offering 2R needs to win more than a third of the time to break even before fees, as the break-even table on the expectancy calculator shows.

How The Print Room uses R

Every call on the desk is posted with its entry and stop, so 1R is known before the trade fills. The bot writes each close in R and in percent of the account at the risk the call was taken at, and the record shows both, losses included.