What Is an R-Multiple?

What it is: An R-multiple is a way to measure trades that compares the result to how much you risked. R stands for “risk.”
Who it’s for: Anyone learning trading math, especially around position sizing and expectancy.
Best if: You’ve seen “+3R” or “−1R” in a trading post and want it explained.
Skip if: You already track your trades in R’s.

An R-multiple measures the result of a trade in “units of risk” rather than dollars. R stands for “risk” — specifically, the amount you would have lost if your stop had been hit.

Example: you risk $500 on a trade (the difference between your entry price and your stop, multiplied by your share count). If the stock works and you sell with $1,500 of profit, you made +3R. If the stock fails and you stop out at the full $500 loss, you made −1R.

The reason R-multiples matter: they normalize your trades. Compare two traders. One makes $1,000 on a $500 risk (+2R). The other makes $1,000 on a $5,000 risk (+0.2R). The dollar profit is the same. The R-multiple shows which trade was actually better.

Van Tharp introduced R-multiples in Trade Your Way to Financial Freedom. The concept is now standard across most modern trading methodologies.

Why it matters

R-multiples are how serious traders compute expectancy — the math that tells you whether your method is actually positive over time. Expectancy = (Win rate × Average winner R) − (Loss rate × Average loser R).

AI tools can automatically tag each trade with its R-multiple result, which makes the expectancy calculation trivial. See AI position sizing and stop-loss for the workflow.

Where you’ll see it

• In Van Tharp’s books and his Institute’s educational materials.
• In Mark Minervini’s position sizing and expectancy discussions.
• In trading journals built by professional traders.
• In our AI trading journal guide.

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