### What is R-Value and R-Multiples ?

R-Value is the initial risk based on your stop loss. R-Multiples is the amount profited (or lost) expressed as a multiple of the trader's initial risk capital.

The concept is based on reward-to-risk analysis. When you get -1R return essentially, the stop loss was carried out with respect to your trading strategy. You can only lose the amount of R-Value defined prior to entering the trade. When you get 3R return, you make 3 times the initial risk.

Traders want their losses to have R-multiples of (0 and -1). The following expression can be used to calculate the reward/risk ratio.

R-Multiple = (Expected Exit Price - Entry Price) / (Entry Price - Stop Loss)