Glossary
Trading journal glossary
Every metric a journal reports, defined plainly and with its formula. If a number cannot be defined in one sentence, it probably should not drive your decisions.
- R-multiple
- Reward expressed as a multiple of the risk you defined at entry. +2R means you made twice what you risked; −1R is a full stop-out. Always computed against the original stop, never a trailed one.
- R = (exit − entry) ÷ (entry − first stop) [long]
- Risk amount
- The currency you lose if the stop is hit. Derived from account equity and your risk percentage, and the input that determines position size.
- risk amount = balance × (risk % ÷ 100)
- Position size
- How many units, shares, coins or contracts to trade so that a stop-out costs exactly your risk amount.
- size = risk amount ÷ |entry − stop|
- Reward:risk ratio (RR)
- The planned distance to target compared with the distance to stop, measured before the trade. A 1:3 setup risks one unit to make three.
- RR = |target − entry| ÷ |entry − stop|
- Win rate
- The share of closed trades that ended positive. Meaningless without the reward:risk ratio it was achieved at.
- win rate = winners ÷ closed trades
- Break-even win rate
- The win rate a given reward:risk needs just to avoid losing money, before costs. 1:1 needs 50%, 1:2 needs about 33%, 1:3 needs 25%.
- break-even = 1 ÷ (1 + RR)
- Expectancy
- Average R you can expect per trade. The single best summary of an edge: positive means the process makes money over a large enough sample.
- E = (win rate × avg win R) − (loss rate × avg loss R)
- Profit factor
- Gross profit divided by gross loss. Above 1.0 is profitable; 1.5 and above is generally considered robust, though it is sample-size sensitive.
- PF = gross profit ÷ gross loss
- MFE — Maximum Favourable Excursion
- The furthest a trade travelled in your favour before closing, best recorded in R. Reveals how much of the available move you left behind.
- MFE (R) = best favourable distance ÷ risk
- MAE — Maximum Adverse Excursion
- The furthest a trade travelled against you before resolving. High MAE on winners suggests your stop sits inside normal noise.
- MAE (R) = worst adverse distance ÷ risk
- Exit efficiency
- The share of the available move you actually captured. The fastest diagnostic for cutting winners early.
- efficiency = realised R ÷ MFE
- Drawdown
- The decline from an equity peak to the following trough, in percent or currency. Prop firm rules typically define a daily loss limit and a maximum drawdown, either static to the starting balance or trailing your equity high.
- Rule-broken flag
- A yes/no field recording whether a trade followed your playbook. Splitting P&L by this flag usually shows the plan-following subset is profitable while the rest is not.
- Emotional state
- A one-click tag chosen at entry — calm, FOMO, revenge, greedy, scared, overconfident, bored — that makes trading psychology measurable rather than anecdotal.
- After-action review
- A short structured reflection written after the close: what went well, what you would change, and whether the exit was early or late.
- Playbook
- Your written rulebook: entry rules, exit rules, risk rules and forbidden behaviours. Can be kept per strategy, per instrument or per trading account.
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