Glossary

Perp trading glossary

R-Multiple

Also written: R, R:R, risk multiple

R-multiple states a trade's result as a multiple of what you risked: a +2R win returns twice your risk, a full stop-out is −1R.

Definition

1R is the amount you decide to lose if a trade hits its stop — your account balance times your risk-per-trade. Risk 1% of a $10,000 account and 1R is $100. Every outcome is then measured in Rs, not dollars: a $200 winner is +2R, a full stop-out is −1R, a trade you cut early for −$40 is −0.4R.

Because R is fixed the moment you enter, it makes trades of different sizes and symbols directly comparable. A +3R on a $500 position and a +3R on a $5,000 position are the same quality of trade — you simply risked different absolute amounts to get there.

Formula

R-multiple = trade PnL ÷ 1R, where 1R = account balance × risk %

1R also equals the entry-to-stop price distance times your position size — the two definitions resolve to the same dollar figure.

Worked example

Risk 1% of a $10,000 account, so 1R = $100. Long entry $65,000, stop $64,350 (a $650 move), which sets your size at $100 ÷ $650 = 0.1538 BTC. Price runs to $66,300 (+$1,300) → about +$200 = +2R. Hit the stop instead → −$100 = −1R. Leverage changes only the margin you post: at the same stop, 10× and 25× both lose exactly 1R.

Why it matters

  • Expectancy is an R number. A strategy that wins 50% at +2R and loses 50% at −1R has expectancy +0.5R per trade — positive regardless of position size. Dollars hide that; Rs expose it.
  • R-multiples make your journal comparable over time. Moving from an average +0.3R to +0.6R per trade is real improvement even when dollar PnL is noisy because your size changed.
  • Sizing by R forces you to decide the loss first and let the math pick the position — the discipline that stops one bad trade from becoming a 10R hole.

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