R is simply the amount you risk on a trade — your planned loss if the stop hits. Measuring outcomes in R-multiples (a win of +2R, a loss of −1R) instead of raw dollars is one of the most clarifying habits in trading, because it makes every trade comparable and your results honest.
How R works
If you risk $100 on a trade, that's your 1R. A trade that makes $250 is a +2.5R winner; one that loses $100 is a −1R loss; one stopped early for $40 is −0.4R. Now a big-account trade and a small-account trade, a cheap option and an expensive one, are all on the same scale — you're measuring skill, not position size. A +2R trade is a +2R trade whether R is $50 or $500.
Why it matters
R-multiples turn your track record into a clean expectancy number (average R per trade), which is the true measure of edge, and they enforce consistent sizing (every trade is 1R of risk, so no trade is accidentally huge). They also reframe drawdowns sanely: “down 4R this week” is a normal variance statement; “down $800” feels like a catastrophe. Thinking in R is thinking in risk, which is how professionals think.
Stop counting dollars; count R. A +2R day is a +2R day whether you traded 1 contract or 10, and your expectancy in R is the only edge number that matters.
How to use it
Define your R (your standard per-trade risk), size every trade to it, and log results in R. Aim for setups with a target at least 2R away from your stop (a good reward-to-risk), and track your average R over time. A positive average R with consistent sizing is a real edge; a jumble of dollar wins and losses on random sizes tells you nothing.