How it works
Define R as the planned risk in price units (entry minus stop, for a long). Compute the trade result as exit price minus entry price. Divide by R. The result is the R-multiple. A trade that closed at twice the planned target is a 2R win. A trade stopped at full loss is -1R. A trade closed early at half the target is 0.5R.
Example
You enter EUR/USD long at 1.0850 with stop at 1.0830 (R = 20 pips). You exit at 1.0890. Profit is 40 pips. R-multiple = 40 / 20 = 2R. Another trade: enter GBP/USD at 1.2700 with stop at 1.2680 (R = 20 pips). You exit at the stop. Loss is 20 pips. R-multiple = -1R. Across 10 trades, summing R-multiples gives total profit in units of risk, comparable across pairs and position sizes.
Why it matters
R-multiples normalise trade results for analysis. A strategy with average R of 0.3 over 200 trades is reliably profitable regardless of pair, time frame, or account size. Track the distribution of R-multiples: expectancy (mean), variance, drawdown in R units. R-thinking forces you to plan stops before entries and judge results against plan, not against the dollar amount.
