R:R Basics — Define Your R

Risk (R) is the amount you are willing to lose if your stop‑loss is hit. If your account is $10,000 and you risk 1%, then 1R = $100. A 2R profit equals $200; a −1R loss equals −$100.

What Are Partial Closes?

Partial close means exiting a portion of the position at one target while leaving the remainder to run to a further target (or with a trailing stop). Benefits include booking gains, reducing psychological pressure, and smoothing equity curves.

Common scaling plans

• 50% at 1R, 50% at 2–3R, then flat or trail.
• 33% at 1R, 33% at 2R, 33% at 3R+.
• Take first partial at structure (midline/MA), trail remainder behind swing lows/highs.

Expectancy — Profitability Over Many Trades

Expectancy estimates the average R you can earn per trade:

Expectancy (in R) = Win% × Avg Win (R) − Loss% × Avg Loss (R)

To be profitable, expectancy must be > 0. You can achieve this with a high win rate, high average R, or a balanced mix.

Worked Examples — Digit‑by‑Digit Math

Example A — Two‑target scale out

Risk = 1R per trade. Plan: close 50% at 1R, close 50% at 3R. If both targets hit, the weighted average R for the position is:

Avg R = 0.5 × 1R + 0.5 × 3R = 0.5R + 1.5R = 2.0R

But not all trades reach both targets. Suppose Win% to first target is 60%, and of those, 50% reach the second target (so 30% of all trades reach 3R). Compute expectancy step‑by‑step:

Outcomes (per 100 trades):
- 30 trades hit 3R and the 1R partial → total per such trade = 2.0R (as above)
- 30 trades hit only the 1R partial, then stop at breakeven on remainder → 0.5 × 1R = 0.5R
- 40 trades stop out at −1R

Total R = (30 × 2.0R) + (30 × 0.5R) + (40 × −1R)
        = 60R + 15R − 40R
        = 35R over 100 trades → Expectancy = 35R / 100 = 0.35R per trade

This is positive expectancy. If your average risk is $100, that’s $35 per trade on average.

Example B — Single full exit at 2R

Compare with a simple plan: full size exits at 2R, win rate 45%.

Expectancy = 0.45 × 2R − 0.55 × 1R
           = 0.90R − 0.55R
           = 0.35R per trade

Interesting: both plans yield ~0.35R in this scenario. The choice can then depend on psychology and drawdown smoothness — partials usually reduce variance.

Example C — Converting R to position size

Account = $10,000, risk 1% → 1R = $100. Stop = 25 pips on EUR/USD. Pip value for 1 standard lot ≈ $10/pip.

Dollar risk per 1 lot = 25 pips × $10 = $250
Position size (lots) = Risk / Dollar risk per lot = $100 / $250 = 0.4 lots

So open 0.40 lots. If you scale out 50% at 1R, you would close 0.20 lots at the 1R target.

Designing Your Partial‑Close Plan

• Anchor to structure: First partial at nearby structure (prior high/low, midline, MA), second partial at measured move (2–3R or opposite channel boundary).
• Breakeven logic: After first partial, consider moving stop on the remainder to entry or to below/above a recent swing.
• Volatility aware: During news or wide spreads, reduce size and allow wider stops; keep R constant by adjusting lot size.
• Journal: Track how often T2 is reached after T1 to refine split (e.g., 40/60 vs 50/50).

Pros & Cons of Scaling Out

Pre‑Trade Checklist

• Defined 1R in dollars and pips (stop distance × pip value).
• Clear T1/T2 (and optional T3) aligned with structure.
• Written rule for moving stop after T1 (breakeven or structure‑based).
• Lot split sizes calculated exactly (e.g., 0.12 / 0.08 for a 0.20‑lot position).
• Upcoming news/spread conditions reviewed.

FAQ

Q: Should I always move to breakeven after T1?

A: It reduces downside but may stop you out on normal pullbacks. Many traders trail below/above the last swing instead.

Q: What split is best — 50/50 or 30/70?

A: Optimize using your journal. If runners rarely reach 3R, shift more to T1; if trends extend well, keep more for T2/T3.

Q: Is scaling out compatible with prop firm rules?

A: Usually yes, but check lot size, partial‑close minimums, and daily drawdown calculations.

Next Steps

Create a spreadsheet: inputs (balance, risk %, stop pips, pip value), outputs (lot size, partial sizes, T1/T2 prices), and expectancy tracker. Backtest on historical charts, then forward test on demo. Keep risk per trade ≤1–2%.