R Multiple

A term used to express trading results in terms of the initial risk. All profits and losses can be expressed as a multiple of the initial risk (R) taken. For example, a 10R multiple is a profit that is 10 times the initial risk. Thus, if your initial risk is $10, then a $100 profit would be a 10R-multiple profit. When you do this, any system can then be described by the R-multiple distribution that it generates. That distribution will have a mean (expectancy) and standard deviation that will characterize it.