If you've watched any of my challenge videos you've probably heard me say things like "plus 3.2R" or "down 2R on the day", and if you're not sure what that means, this one's for you. R is the simplest way to measure your trading honestly, and once you start using it you won't want to go back to looking at dollars.

What R actually means

R is the amount you risk on a trade, so if your stop loss gets hit you lose 1R. Every result is then measured as a multiple of that number, which is why it's called an R multiple.

For example, on a $50k account where you risk $250 per trade, $250 is your 1R. Take profit at $750 and that's a +3R win, get stopped out for $250 and that's a -1R loss, and cut a trade early for a $125 loss and you've lost -0.5R.

The formula is simple, it's your profit or loss on the trade divided by the amount you planned to risk.

Why measure in R instead of dollars

Dollars lie to you, especially in prop firm challenges where you might be trading a $50k evaluation one week and a $150k or $250k account the next. A $500 win means something completely different on each of those accounts, but a +2R win means the same thing every single time.

R also takes a lot of the emotion out of it. Watching -$1,000 on screen hits a lot harder than seeing -1R, and when you think in R you start judging your trades on whether you followed the plan, not on how much money moved.

Most importantly, R shows you straight away when you're breaking your own risk rules. If your normal loss is -1R and a day shows -3R or -4R, something went wrong, and it's usually not the setup.

What 23 days of R taught me

Every day of my Gold Futures prop challenge is tracked in R, and you can see the running total on the cumulative R chart on the home page. After 23 trading days the challenge sits at -11.88R, with a peak of +3.55R after Day 4.

Here's where it gets interesting... my 7 green days added up to +15.12R, so the winners were definitely there, but my 16 red days added up to -27R. That's an average losing day of about -1.7R, when a normal losing trade should only ever cost me 1R.

If every one of those losing days had been held to -1R, the challenge would be sitting at roughly -0.88R, which is basically breakeven, instead of -11.88R. The difference came from a handful of days where I FOMO'd, oversized or revenge traded, like Day 2 at -3R, Day 9 at -4R, and the -2R days where I put on too much size such as Day 8 and Day 10.

That's the power of R. One number showed me my strategy wasn't the problem, my risk management was.

How to start tracking your trades in R

1. Pick your 1R before the session. Decide your dollar risk per trade before you open a chart, for example 0.5% of the account, and write it down so you can't change it mid-session.

2. Record every trade as a multiple. Divide the profit or loss by your 1R and log that number instead of the dollar amount.

3. Turn your daily limit into R. If your daily loss limit is 3R, you know exactly how many full losses you can take before you're done.

4. Watch your average loss. If it creeps above -1R you're moving stops, scaling in or oversizing, and that's the first thing to fix.

5. Chart the running total. A simple cumulative R line shows your real progress far more clearly than an account balance ever will.

R and expectancy

Once your trades are in R you can work out your expectancy, which tells you what an average trade is worth. You multiply your win rate by your average win in R, then subtract your loss rate multiplied by your average loss in R.

For example, if you win 40% of your trades with an average win of +2.5R and lose 60% with an average loss of -1R, your expectancy is (0.4 × 2.5) − (0.6 × 1) = +0.4R per trade. Let that average loss slip to -1.7R like mine did though, and the exact same strategy becomes (0.4 × 2.5) − (0.6 × 1.7) = -0.02R, which is a losing system.

Same setups, same win rate, completely different result. That's why protecting your 1R matters more than finding a better entry.

FAQ

Is 1R always the same dollar amount?

Only if your risk per trade is fixed. A lot of traders risk a percentage of the account, so 1R grows or shrinks with the balance, but the R multiple still lets you compare every trade fairly.

What's a good R multiple to aim for?

It depends on your win rate. A strategy that wins often can work with targets around 1R to 1.5R, while a lower win rate needs bigger winners of 2R or more to stay profitable.

Should I count breakeven trades?

Yes, log them as 0R. They still count towards your win rate and expectancy, and leaving them out makes your numbers look better than they really are.

How does R help in a prop firm evaluation?

It turns the rules into simple numbers. Once you know your daily loss limit is 3R and your trailing drawdown is 8R, you can plan exactly how many bullets you have, and I break those rules down in how prop firm evaluations work.

Follow the challenge

Every trade of the challenge is logged in R in the Trade Jutsu Journal, and there's more on sizing on the risk management page.

This article is educational and based on my own experience, so it isn't financial advice, and always check your prop firm's current rules before trading.