# Stops, targets & R multiples

> Thinking in R instead of dollars.

Source: https://www.texttoquant.com/academy/stops-targets-r-multiples
Level: Intermediate · 5 min · lesson 10 of 12

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Once every trade risks the same fraction of your account, you can stop thinking in dollars and start thinking in R, units of risk. It makes wins, losses, and whole strategies directly comparable.

## R is your unit of risk

If a trade risks 1% and makes 2%, that's +2R. A stop out is -1R. Suddenly a strategy isn't 'up $4,300'; it's 'averaging +0.3R per trade over 200 trades', which tells you far more about whether the edge is real and repeatable.

## The reward to risk choice

A 2R target means you risk one unit to make two. Higher targets lower your win rate but raise the payoff per win; the two trade off. Expectancy (win rate times average win, minus loss rate times average loss, all in R) is what actually matters.

## Let ATR set both ends

This example sets the stop at 2x ATR and the target at 4x ATR, a clean 2R trade that adapts to volatility on both ends. The entry is a plain RSI cross so nothing distracts from the exits. Run it and read the average R multiple in the trade metrics, not just the dollar total.

## Try it

```
Buy BTC when RSI crosses above 50 on the daily chart; set the stop at 2 ATR and the take profit at 4 ATR, last 3 years.
```

Run it: https://www.texttoquant.com/terminal?q=Buy%20BTC%20when%20RSI%20crosses%20above%2050%20on%20the%20daily%20chart%3B%20set%20the%20stop%20at%202%20ATR%20and%20the%20take%20profit%20at%204%20ATR%2C%20last%203%20years.&parse=1

**Takeaway:** Judge trades in R, not dollars. A positive expectancy in R that survives validation is an edge; a big dollar number without it is just a big position.

## Check yourself

A trade risked 1% of equity and made 3%. What is that in R?

1. +1R
2. +3R
3. +0.33R

Answer: 2. R is the risk taken. A gain of three times the risk is +3R, whatever the dollar amount was.

Terms used: [r-multiple](https://www.texttoquant.com/academy/glossary#r-multiple), [atr-stop](https://www.texttoquant.com/academy/glossary#atr-stop), [take-profit](https://www.texttoquant.com/academy/glossary#take-profit), [rsi](https://www.texttoquant.com/academy/glossary#rsi)