What is R in Trading?

Risk

And Why is R So Important to Understand?

R in Trading is an objective way to think about success or failure in a trade. R expresses the (possible) return on a trade as a multiple of the risk taken on by that trade.

In my trading log, I register the amount of R I make. Also in my trading videos and ideas, I always talk about targets, for example, as 2R or 3R. You may have wondered why I am doing that. Why don’t I just talk about pips, points, or dollars risked, won or lost on a trade?

To answer these questions in full, we need to dive more deeply into the concept of R in trading. We will look into Risks, Returns, Probabilities and how these relate. Let’s go!

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Trading with Support and Resistance

Bulls and Bears

Support and resistance trading is one of the basic building blocks of trading. Not only is it a basic building block of my trading, but also of most trading done by professional traders. So even if your trading system does not incorporate support and resistance it is still good to understand it and take notice of the most important price levels. Just because many traders are watching these levels, prices usually will react when they get there. Support and resistance are all about “Bulls and Bears”, aka “Buyers and Sellers” and how price itself affects their behaviors/decisions.

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