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R-Multiple Calculator

Measure every trade in R instead of dollars.

How it is calculated

The tool takes entry, initial stop and exit prices. The initial risk per share (1R) is risk = |entry − stop|. The direction is read from the stop: a stop below the entry means a long trade, profit = exit − entry, and a stop above the entry means a short trade, profit = entry − exit. The result is R = profit / risk, shown with two decimals together with the risk and the profit per share in money. All prices must be above zero and the stop cannot equal the entry. Use the stop you planned at entry, not one moved later, otherwise the R no longer measures the original risk. Fees are not included.

Worked example

Buy at 50 with a stop at 48 and sell at 55. The stop is below the entry, so it is a long trade. Risk (1R) = 50 − 48 = $2.00 per share. Profit = 55 − 50 = $5.00 per share. R = 5.00 / 2.00 = 2.50. The trade earned two and a half times the amount at risk, whatever the number of shares. Had it been stopped out at 48, the result would have been −1.00 R.

Try this example →

Common mistakes

  • Moving the stop after entry and using the new stop: R should be measured against the original stop, otherwise a losing trade can look like a small loss.
  • Entering the stop above the entry on a long trade: the tool then reads it as a short trade and the sign of the R flips.
  • Typing the risk distance (2) in the stop field instead of the stop price (48).
  • Comparing R across trades without noting fees and slippage: an exit gapped through the stop can give a loss larger than −1R (for example −1.50 R).
  • Treating R as a percentage return: it is a multiple of the money at risk and says nothing about the percentage move.

About this calculator

An R-multiple expresses a trade's profit or loss as a multiple of the initial risk taken, rather than in raw currency: divide the profit per share by the difference between the entry price and the stop-loss price (the "1R" risk unit), and a trade that made twice its initial risk is a +2R trade regardless of whether that was $200 on a small position or $2,000 on a large one. The concept was popularized by trading psychologist Van Tharp as a way to evaluate a trading system's expectancy independent of position size.

Traders use R-multiples to compare performance across trades of very different dollar sizes on a level playing field, to calculate a system's expectancy (the average R gained per trade over many trades), and to enforce consistent risk management — since position sizing to risk a fixed R per trade keeps any single loss from being catastrophic regardless of the instrument's price.

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