R-multiple: How to Stop Counting Trades in Crowns and Start Measuring in R Units

Petr sits at his screen, excited: out of his last ten trades, eight were successful. Eighty percent! He feels like a market master. Yet, when he looks at his account at the end of the month, he's 12,000 Kč down from where he started. How is that possible when he's "winning" almost all the time? The answer isn't in how often he was right — but in how much he risked each time he was wrong.

And this is exactly the blind spot that the unit professionals call R addresses.

What is R: The Unit of Initial Risk

R is simply the amount you stand to lose when your thesis goes wrong — that is, the distance from your entry to your stop-alert, converted into crowns.

Analogy: R is like the deposit you put on the table before you start playing. It doesn't matter if it's 500 Kč or 5,000 Kč — in R units, it's still "one R of risk." And everything else is then measured against this deposit.

Specifically:

• You buy a position at 100 Kč per share, with a stop-alert at 95 Kč → you risk 5 Kč per share.
• You take 200 shares → total risk is 1,000 Kč = 1R.
• If the price drops to the stop and you exit, you lose approximately −1R.
• If it rises so that you earn 2,000 Kč, that's +2R.
• If you gain 500 Kč, that's +0.5R.

Notice the beauty: you stop thinking in crowns and start thinking in multiples of risk. And that changes everything.

Why R Unifies Trades of Different Sizes

The problem with crowns is that they mix apples with oranges. A trade where you risked 300 Kč and made 900 Kč is "smaller" in crowns than a trade where you risked 3,000 Kč and made 1,500 Kč. But in R, the first trade is +3R (great!) and the second is only +0.5R (below average).

Crowns lie to you about the quality of your decision-making. R tells you the truth.

When you convert every trade to R, you can line them up side by side regardless of the position size. Small account, large account, one stock at 40 Kč and another at 4,000 Kč — everything shrinks to one comparable scale. It's like converting currencies to a common rate before you start adding them up.

Statistics: Why Average R is More Honest than Win-Rate

Here's where the "aha" moment comes. Win-rate is the most overrated number in trading. By itself, it says almost nothing.

Look at two strategies:

Strategy A — Petr, "I'm almost always right":

• Win-rate: 80% (wins 8 out of 10)
• Winning trades: average +0.5R
• Losing trades: average −3R (lets losses run)
• Expected value calculation: (0.8 × 0.5) + (0.2 × −3) = 0.4 − 0.6 = −0.2R per trade

Petr is long-term losing, even though he "wins" eight out of ten times. His losses drown him because they are huge.

Strategy B — Jana, "I often make mistakes, but I don't pay dearly":

• Win-rate: 40% (wins 4 out of 10)
• Winning trades: average +3R (lets profits run)
• Losing trades: average −1R (cuts quickly)
• Calculation: (0.4 × 3) + (0.6 × −1) = 1.2 − 0.6 = +0.6R per trade

Jana is wrong in 6 out of 10 cases — and yet her account grows. Because the risk/reward ratio works for her.

**The metric that decides is called expectancy (expected R per trade). It's the average R that falls on one trade in the long run. Positive = the strategy has a mathematical edge. Negative = you're drowning, no matter what the win-rate is.

Concrete Example: A Series of 10 Trades in R

Let's look at a realistically appearing series (numbers are illustrative):

Trade	Result in R
1	+2.0R
2	−1.0R
3	−1.0R
4	+3.5R
5	−1.0R
6	+0.5R
7	−1.0R
8	+1.5R
9	−0.8R
10	+2.3R

Sum: +2.0 −1.0 −1.0 +3.5 −1.0 +0.5 −1.0 +1.5 −0.8 +2.3 = +5.0R total

• Win-rate: 5 out of 10 = 50% (nothing miraculous)
• Average R per trade: 5.0R ÷ 10 = +0.5R
• Largest single loss: −1.0R (discipline holds)

And now the most important thing: how much it was in crowns depends only on what R you set.** If 1R = 1,000 Kč, the result is +5,000 Kč. If 1R = 2,000 Kč, it's +10,000 Kč. Same decision-making, different position size. R separates the quality of your judgment from the size of your wallet — and that's exactly what you need to see.

Also notice that no single loss exceeded −1R. That's a sign of a healthy system: losses are uniform and predictable, profits are allowed to breathe.

Common Mistake: Evaluating Trades Only by Crowns

The most common beginner's trap sounds like: "I made 800 Kč today, it was a good trade."

Problem: 800 Kč can be a great trade (+4R with a risk of 200 Kč) or a disaster masked by profit (+0.1R with a risk of 8,000 Kč, where you were lucky it didn't go wrong). In crowns, they look identical. In R, they are two completely different worlds.

The second variant of the same mistake: "I lost 3,000 Kč, terrible day." But if you risked exactly 1R = 3,000 Kč and the stop-alert worked as planned, it was a perfectly correct trade −1R. The system did exactly what it was supposed to. Emotions lie to you about quality here.

Crowns trigger emotions. R triggers cold analysis. That's why professionals keep a journal in R, not in currency.

Practical Framework: How to Start Measuring in R Today

1. Define 1R as a percentage of the account, not as a feeling. A common conservative framework is around 0.5–1% of the account per trade. On a 100,000 Kč account, this means 1R = 500–1,000 Kč. This number is your anchor.

1. Before each entry, calculate the position size from R. Formula: number of shares = (1R in Kč) ÷ (entry–stop distance in Kč). Risk first, then position size. Never the other way around.

1. Record each closed trade in R, not in crowns. +2.3R / −1R / +0.5R. In a month, you'll see your true expectancy.

1. Track three numbers: average R per trade (expectancy), largest loss in R (discipline check), and the ratio of average win to average loss.

1. Survival rule: never let one trade exceed −1R just because "it will surely come back." It's the series of uncontrolled −3R and −5R that destroy accounts — not poor success rates.

In QMA: the trade journal calculates R-multiple automatically for you — you enter the entry and stop-alert level, the system calculates the size of 1R and the result of each trade in multiples of R and shows you your real expectancy across the entire series. You stop deciding by crowns and start seeing the quality of your judgment.

Takeaways

• Recalculate your last 10–20 trades from crowns to R. You'll find out if you have positive expectancy or are drowning despite a high win-rate.
• Set 1R as a fixed percentage of the account (around 0.5–1%) and calculate the size of each position from it — risk first, crowns later.
• Implement a strict rule: no single loss exceeds −1R. Survival is the first condition; only then does profit matter.
• Keep a journal in R. Emotions speak in crowns, discipline speaks in R.

open in QMA

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Trading involves risk and is not suitable for every investor. Always conduct your own research or consult a financial advisor before making investment decisions.