R Multiple

R-Multiple is an outcome metric and you can measure the R-Multiple once the trade has been closed.

The R stands for Risk and each trade outcome can be expressed in terms of the initial risk. 

Example

• Your initial stop loss was 100 points away from your entry. 
  
  • If you close the trade for a +250 point return, you made 2.5 times the initial risk. In terms of R-Multiple, that would be +2.5
  • If you close the trade for a loss at your stop loss (-100 points), then your outcome is -1 R-Multiple
  • If you close the trade for a loss half-way towards your stop loss (-50 points), the outcome is -0.5 R-Multiple

Basically, you just need to measure your stop loss distance, which provides the R figure, and when you compare it to the final outcome of your trade.

The formula that is used is:

(exitPrice-entryPrice) / (entryPrice-stopLossPrice)

The R-Multiple will only work properly in your journal when all trades have an initial stop loss profit value.