Stops, targets and thinking in R
Why pros measure results in R, and how a 40% win rate can still make money.
6 min read
R is simply the amount you risk on a trade. If your stop is $1 below your entry, 1R is $1 per share. A target 2 dollars above entry is a 2R target. Thinking in R lets you compare trades of any size.
Why R matters more than win rate
10 trades, risking 1R each
- Wins (4 × +2R)
- +8R
- Losses (6 × −1R)
- −6R
- Win rate
- 40%
- Result
- +2R
Being right less than half the time can still be profitable if winners are bigger than losers. The reverse is also true: a 70% win rate loses money if the losses are huge.
Taking profits
- Scale out: take a third off at 1R, a third at 2R, a third at 3R.
- Move your stop to break-even after the first target so a winner can't turn into a full loss.
- Write the targets down before entering, so greed doesn't decide in the moment.
Key takeaways
- ✓1R = what you risk.
- ✓Win rate alone means nothing without average win and loss size.
- ✓Plan targets before the entry.
Quick check
Trader A wins 70% of trades but averages +0.5R per win and −2R per loss. Trader B wins 40% at +2R per win and −1R per loss. Over 10 trades, who's ahead?
Put it into practice
Our public scorecard shows every Yuppie signal with its result in R, wins and losses.
Education only, not financial advice. Trading involves substantial risk of loss.