Use 'R Value' to unify your risk language

Many people, when discussing trading, only say 'made 200U, lost 500U', but this is not helpful for strategy optimization.

I prefer to use 'R Value' to measure:

1R = the maximum planned loss for this trade;

Stop loss hit = -1R;

Profit 3 times stop loss = +3R.

By compiling this data, you can see:

What is the average profit R value?

What is the average loss R value?

Is the total R value for the month positive or negative?

As long as you achieve:

The average profit R value is significantly higher than the average loss R value,

even if the win rate is average, your system still has the potential for positive expected returns.

This is 'using a unified unit to manage all trades'.

#ProfitLossRatio #RValueManagement