R-Multiples & Expectancy

R is the amount you risk on a trade. If your stop represents $100 of risk, then 1R equals $100. A $200 gain is +2R, and a $100 loss is -1R. Thinking in R makes trades easier to compare across different markets and position sizes.

Expectancy measures the average result of your strategy over time. A system can lose more often than it wins and still be profitable if winners are larger than losers. For example, a 40% win rate can work if average wins are much bigger than average losses.

R-multiples move focus away from single-trade emotion. Instead of asking whether one trade won or lost, ask whether your process produces positive average R over a meaningful sample size.