The R unit, expectancy and fees

Reading makes the difference between a good trade and a bad one. Risk makes the difference between a trader who is still here in a year and a trader who is not. This module puts numbers on everything: size, expectancy, losing streaks, the rules of a funded account, and the journal that tells you whether the method suits you. It starts with the unit of measure, because without it none of the figures that follow makes any sense.

The unit: the R

Everything is measured in R, a trade's initial risk in dollars. A trade won at twice its risk makes +2R, a stop makes −1R, an exit at the entry price makes 0R. The R makes a 1 ES trade and a 9 MES trade comparable, a quiet day and a Fed day, and it prevents the most common trap: judging a trade on its dollars rather than on its quality.