To R Or Not To R

A couple of the trading blogs I read use R to describe their profit/loss on any particular trade. R is the amount they risk on the trade. So if they are risking $5 and the profit from the trade is $5, they say their profit was +1R. Or if they profit $7.50, then their profit was +1.5R.

Similarly, if they lose $5 on that trade, their loss was -1R. Due to slippage, it is possible to lose more than -1R.

Anyway, some people don't like reading about R. It doesn't mean anything to them. R could be $5 or $50,000. Just saying "I got stopped out for -1R" is meaningless. They say.

You could also say that talking about a profit of $5 is equally meaningless. Risking $100 to win $5 is a lot different to risking $1 to win $5.

So, just R figures or just $ figures doesn't seem to say much. Perhaps both should be given.

However, let's say a really fantastic trader doesn't have any money to trade with. It happens. We have phone bills, petrol to buy, mortgages on our fabulous mansions. If he/she told you that they profited +10R on trades day in, day out, those fantastic results may be overshadowed by the fact that he/she was only risking $10 at a time.

People are very quick to scoff when it comes to trading. People are going to lose the benefits of reading whatever that trader had to say, just because (for whatever reason) he had no trading capital to begin with.

Further, even though people write blogs about their trades, they are still allowed some privacy. They shouldn't need to tell everyone how they won/lost $10,000 last month.

So you might lean towards using a standard starting figure. Let's say $100,000. All figures are then based on if that person had exactly $100,000 in their trading bank at the start of each month, or year. It provides privacy and the required information.

But does it? If you think about it, using a standard starting figure tells you nothing more than telling you about R.

So to conclude, the Rs have it. If you really want $ figures, work them out for yourself based on your own account balance.