2026-01-07 06:22:58

When trading, your win-loss probability is actually uncertain, and it's hard to predict whether you'll earn more or less. But there's always a way — you can estimate expected returns through backtesting or run models using real trading data, which helps you see the general effectiveness of your strategy.

The key concept is called the R multiple, which is the risk-reward ratio. It’s simply the actual points gained from your trade divided by the initial risk taken. For example, if you risk $500 and end up earning $1500, the R multiple is 3. Another example: a system entered on August 4, 1997 (at 2511 points), with a 3x ATR stop-loss set at 104 points (at 2407 points), and exited on September 29 (at 3069 points), earning 558 points — this is a 5.37R trade.

The distribution characteristics of the R multiple essentially determine how much your method can earn. Therefore, you need to develop a position management algorithm that not only maximizes expected returns but also ties each trade’s initial risk and your account capital together. Especially for beginners, you might want to consider...

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MoonWaterDroplets

· 13h ago

R multiples are essentially profit-loss ratios, but very few people actually use them effectively. Backtest data looks good, but real trading often proves otherwise, which is scary. Position management is the key; otherwise, even the best strategies are useless. 5.37R sounds great, but can it be consistently reproduced? That's the real question. Risk management is the most overlooked aspect by beginners; going all-in is the fastest way to lose.

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BuyTheTop

· 01-07 07:22

Backtest and live trading data are too far apart; a 5.37R on paper might only become 1.5R in a real account... R multiples sound simple, but when it comes to actual position management, it's a nightmare. Risk and reward are never proportional. It sounds good, but most people can't stick to the strategy at all. Why bother calculating such precise expected returns?

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retroactive_airdrop

· 01-07 06:53

Backtesting data looks good, but the real account is the true test of whether you can spot the fraud. --- 5.37R sounds impressive, but the premise is that you survive long enough without getting liquidated. --- Basically, you need to calculate your account leverage properly and avoid going all-in. --- The distribution of R multiples is where the real competition lies; most people haven't even calculated it. --- The easiest mistake for beginners is to get carried away after seeing one or two 5R trades. --- Having a positive expected value is pointless if risk management isn't done well; you'll still fail. --- You need to put real effort into position management; otherwise, no matter how good your strategy is, it's all talk.

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AirdropHuntress

· 01-07 06:49

Backtest data looks good, but in real trading, it's often these impressive R multiples that give you a reality check.

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APY_Chaser

· 01-07 06:44

The R multiple is essentially a profit and loss ratio. What really traps most people is position management. 5.37R sounds pretty good, but being able to consistently reproduce it is the real key.

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fren.eth

· 01-07 06:44

R multiples sound good, but real profit depends on execution Backtest data looks good, but live trading is the real test Both stop-loss and position management, after doing it all, hands are trembling 5.37R sounds great, but can't hold on for more than two weeks before everything is lost Expected returns are just for self-comfort In real trading, there aren't that many 5R opportunities, mostly 0.5R side bets This theory sounds good to beginners, but the conclusion is margin calls Risk-reward ratio is important, but mental state management isn't discussed, and that's the killer

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faded_wojak.eth

· 01-07 06:28

Damn, I've been using the R-multiple system for a long time. It's just that sometimes the backtest data looks perfect, but once I go live, the true nature is revealed. Earning 5 times the risk-reward ratio—how lucky would that be? My strategy usually hovers around 1-2R. The key is position management, brother. Otherwise, even the best strategy can blow up. No matter how perfect the model runs, it’s not as good as a month of live trading. Many people get stopped out during that time. I've seen many beautiful backtests, but very few can consistently produce R-multiple returns. Understanding the risk-reward ratio is one thing, but executing it is another. It's easy to say, but every time I lose my composure. You have to take a few more hits to truly understand.

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0xTherapist

· 01-07 06:27

The R multiple is essentially a profit-loss ratio. Even with impressive backtest data, it's easy to fool oneself. --- Honestly, position management is the real challenge. Adjusting parameters can easily cause the account to blow up. --- A 5.37R trade... that's how it looks on a demo account. Achieving half of that in real trading is already a good feat. --- So the key is discipline; otherwise, no matter how high the R multiple is, it's all talk. --- A good-looking expected return doesn't necessarily mean you can make money. These mathematical models can be toxic for beginners. --- Why always emphasize backtesting? Isn't running data directly on a live account more realistic? --- Position management is both simple and difficult. Many people fail at this. --- Making 1500 while losing 500... I'm more concerned about the win rate of this trading system. The R multiple is just superficial.

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