An R-multiple is a trade’s profit or loss expressed as a multiple of the amount initially risked, where 1R is the money lost if the trade is stopped out at the planned stop-loss. A trade that risks $100 and makes $300 is +3R; a full stop-out is −1R, regardless of the instrument or account size.
Thinking in R normalizes results. A $500 win on a $50,000 account and a $50 win on a $5,000 account can both be +1R trades — the same quality of decision. That makes journals, backtests, and strategies directly comparable, and it lets expectancy be quoted in R per trade rather than in dollars.
R-multiples also expose management leaks. If your average loser is −1.4R, you are moving stops, oversizing, or eating slippage — your real risk is bigger than your planned risk, and the journal shows it immediately.
You buy at $50 with a stop at $48 on 50 shares, risking $100 (1R). Exiting at $55 makes $5 × 50 = $250 → +2.5R. A stop-out loses $100 → −1R.