Thinking in R

R is a unit, and the unit is the risk you accepted before you entered. If you accepted a $100 loss at the stop (plus a little room for fees), that $100 is 1R for that trade. If you then exit with a $200 gain, that outcome is about +2R. If the stop is hit as planned, the outcome is about −1R.

The point is not the letter. The point is that a $200 gain on a $100 risk and a $200 gain on a $2,000 risk are different decisions. Talking only in dollars hides that.

One outcome in a series

Any single trade can win or lose for reasons that have nothing to do with whether a process is sound. A careful plan can lose. A sloppy click can get lucky. I try to grade the process separately from the outcome, and I try to look at a series, not a highlight.

Expectancy is the average R per trade over a large, honest sample, after costs. It is a useful idea and a dangerous word if you apply it to a handful of examples. This site has not published a verified expectancy or a live track record. When you see +1R or +2R on an educational chart, it is a labeled illustration of a hypothetical target, or a way to talk about scale — not a result I am claiming.

What thinking in R will not do

It will not make losses feel like zero. −1R still spends money. It will not tell you the next trade’s outcome. It will not turn three clean pictures into a business. It will help you keep risk comparable, which is a prerequisite for judging a process later, if you ever have enough honest data.

A habit to practice

For any practice idea, write the accepted 1R in money, then write the result as a multiple of that number, including fees if you know them. If you cannot name 1R, you cannot name the result in R — and you are back to the previous lessons. Next we talk about the mindset that tries to skip this arithmetic when a trade feels personal.