Glossary
R multiple
The result of a trade divided by its initial risk (entry to stop-loss). A full stop-loss is −1 R; a win twice the risk is +2 R.
R is the initial risk of a trade — the distance between entry and stop-loss, or the money you would lose if the stop is hit. The R multiple expresses any result as a multiple of that risk.
Example
You buy gold at 3,650.0 with a stop-loss at 3,642.0. The risk is 8.0 USD per ounce, or 80 pips in our ledger. If you exit at 3,666.0, the result is +16.0 USD per ounce: +2 R. If the stop is hit, the result is −1 R.
Why we use it
R makes results comparable across instruments with very different pip values, and it keeps losses visible. Average R per trade (expectancy) shows what a method returned per unit of risk, before costs.