1R is the amount you are willing to lose on one position. If 1R = 1% of capital, then a "−1R" loss means −1% and a "+2R" win means +2%.
Why this is useful
- It puts all positions on the same scale so results can be compared.
- It shifts your focus from money amounts (which trigger emotions) to ratios (which are objective).
- It makes evaluation easier: "my system produced +8R this month" is more informative than a nominal figure.
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