The R-Multiple

We measure athletes by metrics that normalize performance.
Batters by their hit rate.
Golfers by handicap.
Quarterbacks by QB rating.

Yet some traders still want to be judged by how many dollars they made. That’s noise.

So how should we measure a trader’s performance?
Short answer: the R-multiple.

Enter the R-Multiple

R = The amount you're willing to lose. Period.
Before you click anything, you better know that number cold. It could be your stop-loss, ATR level, or the premium you shelled out — doesn’t matter. What matters is that it’s defined.

Now, if your trade doesn’t have at least the potential to pay you what you’re risking, you’re just gambling with bad odds.

1R risk → 1R reward = the minimum bar for sanity.
If anything less, you’re playing to break even at best. And in trading, breaking even is just a slow, painful way to lose.

R works as your scorecard. Every trader should ask:

• “What’s my average R on this setup?”

• “Which strategy delivers the best R profile over time?”

Because over enough trades, the money follows the math, not the vibes.

Eventually you will find a recognizable pattern that comes from R, for example:

• Swing Pullbacks: 2R–3R trades. Low frequency, high quality.

• Credit Spreads: 1R–1.5R. Smaller wins, high win rate.

Track long enough, and you’ll see which setups print, and which ones bleed.