Or “R Unit,” a unit of risk is a concept used to dampen the emotional strain of measuring trading performance in dollars. It is represented as a ratio and provides a means to compare real-world trading performance versus probable performance. It can be used for position sizing, stop losses, and other risk management decisions.
Units of Risk
We don't know everything about the markets. We're just devoted to learners. Taken from those smarter than ourselves, here's how we define Units of Risk.