What is 1R and how to calculate expectancy in trading
9 min read · Published 28 Oct 2026
1R is the amount you lose if price reaches your stop. A trade’s result divided by 1R is its result in R, and the average of a series estimates expectancy. With this one unit you can compare every trade and every strategy, whatever the size of your account or position.
Abbreviations: R (R multiple) is a trade’s result in units of risk; −1 R means a loss equal to the distance to the stop. Win rate is the share of trades that end in profit. PF (profit factor) is total gains divided by total losses; 1.00 means breaking even. RR (reward-to-risk ratio) is the planned distance to the target divided by the distance to the stop.
How to calculate R step by step
Step 1: set 1R before you enter. You have a $10,000 account and risk 1% per trade, so 1R is $100. You buy at 2,000 and place the stop at 1,990, 10 points lower. You size the position so that one point is worth $10: $100 divided by 10 points.
Step 2: divide the result by 1R. The result in R is the profit or loss in dollars divided by $100. Prices give the same answer: the move from entry divided by the distance to the stop.
| what happened | exit price | result | in R |
|---|---|---|---|
| price reached the target | 2,020 | +$200 | +2 R |
| price reached the stop | 1,990 | −$100 | −1 R |
| manual exit before the stop | 1,996 | −$40 | −0.4 R |
| gap: the market opened beyond the stop | 1,975 | −$250 | −2.5 R |
Step 3: add up a series. Here are ten trades in R, still without costs: +2; −1; −1; +3; −1; −0.4; +2; −1; −2.5; +1.5. The total is +1.6 R, or +$160. The average is +0.16 R, or $16 per trade. The average of a series estimates expectancy: what one trade brings on average.
Expectancy, win rate and profit factor
The series has 4 winners and 6 losers, so the win rate is 40%. The winners add up to 8.5 R, or 2.125 R on average. The losers add up to −6.9 R, or −1.15 R on average.
Expectancy = win rate × average win − (1 − win rate) × average loss. Enter the average loss here without the minus sign.
In the example: 0.4 × 2.125 − 0.6 × 1.15 = 0.85 − 0.69 = +0.16 R. It matches the average, because it is the same number calculated another way.
The profit factor is 8.5 ÷ 6.9 ≈ 1.23. A PF above 1 says that gains exceeded losses. It does not say how much is left from one trade. Only expectancy shows that.
Win rate alone does not settle anything either. With the averages from the example, break-even sits at a win rate of 1.15 ÷ (2.125 + 1.15) ≈ 35.1%. It also works the other way round. With 60% winners, a 0.5 R win and a 1 R loss, you get 0.6 × 0.5 − 0.4 × 1 = −0.1 R.
What typical guides don’t tell you
−1 R is not the floor. A triggered stop becomes an order at the current price. In a gap or a violent move, it fills further away than it stood. In the example, the gap produced −2.5 R. We tested carry, buying high-interest currencies against low-interest ones, on 28 pairs in 2005–2026. A stop checked on the daily close did not protect against violent moves there. The worst single position lost 6.8 R (chapter 38).
R without costs is not R. Spread, commission and swap reduce every result. Swap is the fee for holding a position overnight. Cost in R is cost in points divided by the distance to the stop. If the example trade costs 0.8 points, or $8, you pay 0.08 R. Expectancy then drops from +0.16 to +0.08 R, and a loss at the stop grows to −1.08 R. With a 4-point stop, the same cost is already 0.2 R, more than the whole edge in the example. In our test of indicator arrows on bitcoin, the spread was about $5 with a stop of about $20–25. Cost therefore took one fifth to one quarter of the risk. Random entries with the same stop and target lost 0.22–0.25 R per trade on average over 6,464 draws (chapter 5).
A small average can be zero. We tested channel breakouts: buying above the high and selling below the low of the last candles. The correctly calculated version made +0.020 R per trade over 7,523 trades. The PF was 1.03, practically zero, and 0.98 without the 20 best trades (chapter 1).
Expectancy from a small sample is uncertain. The average in the example is +0.16 R. The standard deviation, the typical distance of a result from the average, is 1.81 R, however. To tell such an average from zero, you need about (2 × 1.81 ÷ 0.16)², or roughly 510 trades. After costs, at +0.08 R, you already need about 2,040. Half the edge therefore needs a sample four times as long. At +0.02 R and the same variability, you need over 30,000 trades.
No stop, no R. R needs a risk known at entry, and a position without a stop has none. You can write down the amount you plan to lose, but that is an intention, not an order: the market will not stop there. The original stop is also what counts. If you trail it later, keep calculating R from the first level, or the result will come out inflated. A platform report may hold only the last stop level, so record the original one separately.
What our tests showed
Three examples from our tests, all in R after costs:
- Win rate is not profit. A gold signal channel with over five years of history had a 47% win rate. Over 1,080 signals it made −0.012 R per signal, that is, zero (chapter 45).
- Planned RR is not a result. We tested the opening range breakout on gold: entering when price leaves the range of the first 15 minutes of the session. The target was 5 R. In the London session in 2018–2023 it was hit 29 times in 926 trades. The average result was +0.034 R, PF 1.06 (chapter 10).
- Historical averages shrink. The 13 best of 1,344 simple rules made an average of +0.201 R per trade in 2018–2022. In 2023–2025 the same rules made an average of +0.049 R (chapter 7).
Check it yourself
The “Luck or edge?” calculator. Copy the series from step 3 into the “Paste results” tab, with the unit set to R; semicolons work as separators. You will see an average of +0.16 R and a 90% range from −0.73 to +1.08 R. That is the middle 90% of the averages from 10,000 resamples of your results. The tool puts the chance that the true average is positive at 62%. The verdict reads “Too few trades”, because below 20, no statistic tells you anything. Without the best 3 trades, the total falls from +1.6 to −5.4 R, and the “How many trades needed” box shows ≈ 511. You can also paste results in dollars and enter 1R. Without that amount, the tool takes the median loss as 1R. From a report, it calculates R from the stop. If a trade has no stop, or its stop sits close to entry or on the profit side, the tool uses a substitute risk. That is the median risk of the other trades or the median loss.
The trading journal calculates R in this order: a result typed in manually, then the net result divided by the 1R risk, and finally entry, stop and exit prices. The last route works only when the stop is on the losing side. It leaves out costs, so it is better to enter the net result and 1R. A trade with no stop, no risk amount and no manual R is left out of the statistics. The exception is a report import, which follows the calculator rule above. When syncing with your platform, the journal takes the risk from the stop set when the position was opened. The result then includes commission and swap. The assistant also warns you when risk varies a lot from trade to trade. The money result then depends more on position size than on the strategy.
The challenge calculator. In “Parameters” mode you enter the win rate, the average win in R and the average loss in R: the three numbers from the formula. You will see the chance of passing at a risk of 0.25% to 2% per trade. The calculator also compares it with the same trades without an edge.
Questions
What is 1R?
1R is the amount you lose if price reaches your stop. You set it before entering. With a $10,000 account and 1% risk, it is $100, so a +2 R result means a $200 profit.
How is R different from RR?
RR, the reward-to-risk ratio, is a plan: the distance to the target divided by the distance to the stop. R is the result after the trade is closed. A high RR achieves nothing if the target is rarely hit. What decides the outcome is the average R of all trades.
What is a good expectancy?
There is no single threshold. Expectancy has to be positive after all costs and distinguishable from zero for your number of trades. A historical result is usually inflated. By our own arithmetic, the best of 224 variants with no edge would still show about +0.25 R over about 300 trades (chapter 7).
Should you calculate R from money or from pips?
From money, if you know the net result and the risk in account currency. Then R includes spread, commission and swap. R from pips or points leaves out costs, so it usually overstates the result. It is useful for judging the entry on its own, before you add costs.
Educational content, not investment advice. Past results do not guarantee future results. The numbers in the example are made up for the arithmetic. The numbers from our tests describe our reconstructions of strategies, on our data and with our costs.