Risk, R and R-multiples explained

If you ask me how much pips I made last month, I will tell you I don’t know.

 

But I will know my R-multiple of last month: a 6.1R profit. This R number often results in confused looks. What does R stand for?

 

In order to figure this out, we need to take a step back and look at our performance and its relationship with risk.

 

 

Risk and Reward To Risk

 

When you say that you made a 50 pip profit, that only tells me part of the story. The key piece of information that is missing here is how much you risked to make this profit. After all, a 50 pip profit is a good result if you had a 25 pip stop loss but if your stop loss was 200 pips, you risked a lot to get a relatively small reward.

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