How Does the R-Based Take Profit System Work?
The R-based take profit system sets a profit target based on your initial risk. "R" equals the distance from your entry price to your initial stop-loss. If you set a 2R target, your take profit is 2 times that distance above your entry. This creates a consistent reward-to-risk ratio for every trade.
1How It Works
- •When you enter a trade, the system notes your entry price and the initial stop level.
- •R is calculated as the absolute difference: R = |Entry Price - Initial Stop|.
- •You choose a multiplier (e.g., 1.5R, 2R, 3R) representing your target reward.
- •Take Profit Price = Entry Price + (R × Multiplier) for long positions.
- •The target is evaluated at end-of-day after checking if the stop was hit.
- •If price reaches the target before the stop, the system signals to take profits.
2Example
Calculating a 2R Take Profit
Trade setup:
• Entry Price: $45.00
• Initial Stop (Chandelier Exit at entry): $42.00
• R Multiplier: 2
Step 1 - Calculate R:
R = |Entry - Stop|
R = |$45.00 - $42.00|
R = $3.00
Step 2 - Calculate Take Profit:
TP = Entry + (R × Multiplier)
TP = $45.00 + ($3.00 × 2)
TP = $45.00 + $6.00
TP = $51.00
Outcome scenarios:
• If price hits $42.00 first → Exit at stop (lose $3/share)
• If price hits $51.00 first → Take profit (gain $6/share)
• Reward:Risk ratio = 2:1
3Common Questions
What R value should I use?
Common values are 1.5R to 3R. Lower values (1.5R) trigger more often but with smaller gains. Higher values (3R) are hit less often but yield larger profits when reached. Many traders use 2R as a balance.
Is the take profit mandatory?
No. The R-based TP is optional. You can disable it and rely solely on the trailing stop to exit when the trend reverses. Some traders prefer to "let winners run."
What if price never reaches the target?
Then you exit based on the trailing stop or other criteria. The take profit is a target, not a guarantee. The trailing stop protects you either way.
Does R change as the trailing stop moves?
No. R is locked at entry based on your initial stop. Even as the trailing stop rises, your original R and target remain fixed.
Can I take partial profits at the target?
The system shows when the target is reached. You could exit partial tranches at target and let others run with the trailing stop. This is a personal risk management choice.
Technical Notes
- —R is calculated once per tranche at entry and stored for the life of the trade.
- —Take profit evaluation occurs at end-of-day, after stop-loss checks.
- —The R multiplier is configurable in monitor settings.
- —This feature is optional and can be disabled.