What is R-Multiple?

What is R-Multiple?

1R is the money you lose if the trade hits its stop loss. It is decided before entry from two numbers: the distance from entry to stop, and the position size.

A trade’s R-Multiple is its result divided by 1R.

Trades A and B made the same money, but A returned twice what it put at risk while B returned a fifth of it. R shows what the money figure hides.

Why is R better than measuring only in money?

• Trades of different size become comparable. A small and a large trade sit on the same scale.
• Markets become comparable. 50 points on gold and 50 pips on EURUSD are different things; +1R is the same thing.
• The decision is separated from the size. A system has an edge when its average R per trade is positive over enough trades, whatever size you trade.
• It is the basis of position sizing. Once you know how much 1R is worth to you, the size follows from the distance to the stop.

Where do traders get R wrong?

• Setting the stop after entry. 1R is no longer decided in advance, and every later measurement drifts.
• Widening the stop when price moves against you. The loss is now bigger than the original 1R, but the journal still says −1R.
• Looking only at win rate. Winning 70% with an average win of +0.3R and losses of −1R is still a losing system: 0.7 × 0.3 − 0.3 × 1 = −0.09R per trade.
• Ignoring commission and slippage. With a very tight stop, costs can be a large share of 1R.

Chart example

Illustration, not real market data.

A common partial take-profit plan: close half the position at TP1 (+1R) and half at TP2 (+2R).

How does AURORA use R?

AURORA draws a trade plan for every signal. The F-SL, the fixed stop set at the signal candle, defines 1R; TP1 defaults to 1R and TP2 to 2R. When a trade closes, the result label is written in R, for example ✓ +1.5R · TP2 or ✗ −1R · SL, and the dashboard adds up total R and average R per trade for each setup.

AURORA’s Strategy Validator sizes positions as a percentage of equity at risk, so Strategy Tester results follow the same logic.

You do not need AURORA to use R: a spreadsheet with entry, stop, size and result is enough.

When does R mislead?

• Gaps and slippage. When price jumps through the stop, the real loss can exceed 1R. Record planned R and realised R separately.
• Very tight stops. A tiny 1R makes results in R look large, but costs measured in R grow just as much.
• Small samples. The average R of ten trades says little; you need more trades and an out-of-sample check.
• Different holding times. Two systems at +0.3R per trade, one holding ten times longer, use capital very differently.