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.