R-Multiple

R-multiple is the trader's-eye unit of P&L because it strips out instrument-specific dollar amounts and exposes the shape of the strategy. A 3R winner on a $100 stop is the same trade as a 3R winner on a $500 stop, from the strategy's perspective. The unit makes a year of trades across multiple instruments directly comparable.

The strength of R-multiple as a metric is that it forces the trader to define risk before the trade — there is no R without a stop. Strategies that don't explicitly cap downside per trade can't be evaluated in R, and that incompleteness is itself a useful diagnostic. If you can't say what 1R is on a trade, you don't know what you risked.

Most discretionary traders worth studying produce an average R-multiple between 0.3R and 1.5R across all trades (winners and losers combined). The largest individual winners are often 5R to 10R; the strategy's profitability comes from a small number of these compensating for the steady drumbeat of 1R losses. This is the asymmetry Peter Brandt and Stanley Druckenmiller talk about when they say accuracy is not the scoreboard.