R: measuring every trade by its risk
R is the amount you planned to lose if the stop hit. Every result on this site is a multiple of it, so a trade reads the same at any account size.
1R is what you stand to lose on a trade if your stop is hit. It's set before you enter: the distance from your entry to your stop, times the size of the position.
Every result is then measured against it:
- Lose exactly what you planned → −1R
- Make twice what you risked → +2R
- Get out at your entry price → 0R (a scratch)
Why R instead of dollars
Dollars depend on account size. A $500 gain is huge on a small account and noise on a large one. R strips that out. If a strategy averages +0.4R per trade, that's true whether you risk $20 or $2,000 a trade, so you can learn from it at your size.
It's also why no dollar amounts or share counts appear here. You don't need them. The R tells you everything that matters.
A real example
IBRX, October 8: bought at 9.65 with the stop at the day's low, 9.43. Risk per share was 0.22. That 0.22 is 1R.
Later that day I sold about half at 9.94. That's 0.29 above entry, or 0.29 ÷ 0.22 = +1.32R on that piece. The stop on the rest moved to 9.70, just above entry. From then on the worst case on the trade was about break-even.
Reading R on this site
- Stop in R on a live trade shows where the stop sits now: −1 is the original stop, 0 is break-even, and anything above 0 is profit locked in.
- Banked so far is the R already taken off through trims.
- Expectancy on the record is the average R per trade. Above zero means the process makes money over many trades, even with plenty of losers.
Trades that cite this
1 finished · win rate 100% · expectancy +1.45R · total +1.45R
Related
- Gap risk: when the stop doesn't save youIf a stock opens below your stop, the stop fills at the open, not at your price. Holding overnight always carries this risk, and the record shows it.
- Partial profits and the break-even stopSell part of the position into strength, then move the stop on the rest to entry. The trade can no longer become a real loser, and the remainder gets room to run.
- Position sizing: size comes from the stopYou don't pick how many shares to buy. You pick how much you're willing to lose and where your stop is; the share count falls out of the math.
- Risk firstDecide what you can lose, and where you're wrong, before thinking about what you can make.
- The stop: deciding where you're wrongA stop is the price that proves the trade idea wrong. It's chosen before entry, placed as a live order, and only ever moved in your favor.