Define 1R before entry
Record entry, original stop, contract quantity and point value. Here, 1R is the price distance to the original stop expressed in USD, excluding fees. The numerator is the result after fees. Keep this convention unchanged across trades.
An ES example including fees
A synthetic ES long enters at 5,000 with an original stop at 4,998 and one contract. At USD 50 per point, 1R = 2 × 50 = USD 100. An exit at 5,003 yields USD 150 before fees and USD 144 after USD 6 in fees: 1.44R.
Moving the stop later does not change the original 1R. Reducing the denominator afterward would make the same trade look artificially better. Without a recorded original stop, the R-multiple cannot be determined on this basis.
Losses can exceed 1R
Stop execution, gaps, fees or rule violations can increase the actual loss. A result of −USD 116 against USD 100 of initial risk equals −1.16R. A stop defines a plan and does not guarantee a maximum loss.
Read R and money together
Show the net balance, trade count and distribution of initial risk beside the average in R. The average of individual R-multiples need not equal total net profit divided by total initial risk when position risks differ.
R-multiple = net result / initial risk in USD
Sources and methodology
Sources explain concepts or the respective provider’s product descriptions. Worked examples are original and synthetic. Verify current contract specifications before use.