Exactly!! I have a friend who trades and told me he made $4000 in one day. I said great, but how much did you risk? If he risked $1,000,000, I would dare to say it wasn’t a very good trade.

Let’s look at your example…. the fact is, the guy that made 2 R _was_ more successful. I cannot stress this enough. If you assume they were risking the same amount (let’s say 2% of their account), the 2R trader made 4% on a 30 cent gain, while the 1R trader made 2% on a 50 cent gain.

Is the ’subjective R’ crowd assuming the two example traders traded the same amount of shares? That’s not comparing apples to apples anymore, since now the two traders are risking vastly different amounts of money (relative to their account size). But, EVEN SO, the 2R trader STILL comes out ahead in the long run. To prove this to yourself, think about the same example, only it’s a losing trade. One trader loses 15 cents, and the other lost 50. Repeat the experiment assuming a typical 40 to 50% win rate, and the 50 cent trader will be serving the 15 cent trader fries at the local mcdonald’s before too long.

I understand that many people don’t like to post the size and dollar values of their accounts. Posting percentages works just as well.

Paul

Thanks!

- win % (winning trades vs. losing trades)
- actual W/L ratio
- biggest loser vs biggest winner
- expectancy (a derivative of the first two qualities)

And these qualities should be measured over a big chunk of trades - IMO, 30 trades are a good start, but the more trades, the more reliable these results are, when focusing on measuring consistent success. And that’s what successful trading is about - consistency and at the most, controlling risk (and losses) - the fact that you just made 50% on one trade means nothing in terms of skillful trading. So talking and thinking in terms of R-multiple when you discuss about profits is an excellent approach - that by itself makes you focus on risk and money management - the actual “grail” to successful trading. When I read other people’s trading articles, sometimes it’s good to know the number of shares in the position though - the actual dollar amount gained/lost can be calculated from there. The share amount sometimes illustrates even better, how effective it is to enter off a low-risk zone compared to a higher-risk zone and it is very educational to see that in some situations one is able to purchase 2000 shares and in riskier situations maybe 500 shares while on both trades, he risks an equal amout basically.

Good trading.

Rx

Like you said, the $ value is meaningless in terms of trading performance. It’s meaningful in the sense that it’s dollars that pay my electric bill, but that’s about it. If I make more money this month, that doesn’t mean I’m trading better. If I make more money than you, that doesn’t mean I’m a better trader than you. So, I just resist the peer pressure, and stick with R. Some people say, post ‘em both, then, but I just know people will stare at the $ and miss the point. In a couple years I’ll just say “I havent had a job in two and a half years… I must be making _some_ money!”