Define what 1 R means here
Every trade is fictional. For a linear long position we use 1 R = N × abs(entry price − initial planned exit). This is positive initial price risk in USD. Under our convention, fees are excluded from the denominator and deducted in the numerator; the output is net R.
Fix initial 1 R when recording the terms. Moving a stop or completing the trade does not authorize replacing it with a more convenient denominator. If initial risk is zero or unknown, R is unknown and division must not be performed.
| Case | Shares | Entry | Initial exit | 1 R, USD |
|---|---|---|---|---|
| A | 20 | 50.00 | 48.00 | 40.00 |
| B | 200 | 30.00 | 29.00 | 200.00 |
Two independent trades with different bases
In A, buy 20 shares at 50 with an initial planned exit 48: 1 R = USD 40. Selling at 54 gives 80 before costs. The stated USD 4 full-cycle cost covers both sides, leaving 76; 76/40 = 1.9 R.
In B, buy 200 shares at 30 with initial planned exit 29: 1 R = USD 200. Exit 31 gives 200 gross; deducting the stated 10 for the entire cycle leaves 190, or 0.95 R. B is larger in dollars, A relative to initial risk. These are separate situations, not one account history.
| Case | Gross, USD | Costs, USD | Net, USD | Net R |
|---|---|---|---|---|
| A | 80.00 | 4.00 | 76.00 | 1.90 |
| B | 200.00 | 10.00 | 190.00 | 0.95 |
| A: separate gap | -60.00 | 4.00 | -64.00 | -1.60 |
Minus 1 R is not a lower bound
Take an independent alternative for A: actual exit 47 instead of 54. Price P&L is minus USD 60; after the same 4 full-cycle cost it is minus 64. The denominator remains 40, so −64/40 = −1.6 R.
A gap can pass the original exit level, and expenses increase cash losses too. Executed prices are already specified: do not deduct the same spread or slippage again.
What R does not establish
R normalizes a single trade result; it is not a return on account equity, which is unspecified here. Two observations do not establish future win probability, method stability or an appropriate risk allowance.
State whether costs are included, how initial risk is defined and whether fills are known. Do not silently change the denominator convention between observations. Sample averages and expectation under unknown probabilities are separate questions.
Check it yourself
Initial 1 R is USD 100, gross result 160 and full-cycle costs 10. What is net R? What if initial risk is unknown?
Answer: (160−10)/100 = 1.5 R. In the second case the value is unknown, not zero. Reimagining the exit after completion does not change the original 100.
Save the chart and record initial risk separately
Keep entry, initial planned exit, quantity, initial 1 R, actual fills and all costs in an external journal. A saved Student Wyckoff workspace helps revisit closed bars, but is not an automatic broker journal or R calculator.
- Fix a positive initial denominator.
- Label gross and net results.
- Do not infer future performance from normalization.
Primary sources
Sources explain the mechanics and limitations; the editorial examples use invented numbers rather than market quotations.
Your next practical step
Explore saving a workspace to return to the same symbol, interval and chart area. Keep initial risk and cash executions in an external journal.
Explore workspace saving ↗