So, I'm an old BECMI/AD&D 1E player and I just "converted" over to 5E. So far, there's a lot to like and I'm happy with it.
That being said, I want to understand the concept of challenge ratings. In the Monster Manual it says
"An appropriately equipped and well-rested party of four adventurers should be able to defeat a monster that has a challenge rating equal to its level without suffering any deaths. For example, a party of four 3rd-level characters should find a monster with a challenge rating of 3 to be a worthy challenge, but not a deadly one."
So the algorithm to calculate CR is as follows:
(# players in the party) × (average PC level) ÷ 4
So...for a party of six 5th level PCs, that would be a 6 × 5 ÷ 4 = 7.5
So...a young green dragon (CR 8) would be good. Or maybe 4-8 wolves (CR 1/4 each) + 2 werewolves would be good (CR 3 each)
Am I understanding this concept correctly?
No.
The CR is kind of like a boundary, past which, monsters will probably be tougher than dangerous. They hit harder, take more punishment, etc. Yse monsters with higher CR when you want to increase the chance of dropping a PC. Thus 4 PCs at 5th level have a reasonable challenge with a CR 5 monster. A CR 6 monster has a real chance of dropping a PC. A CR 8 monster may wipe your party.
If you want to calculate challenges for a party of 6, you still use the party level to set your monsters' CR as your hard cap. However, every additional monster changes the XP cost.
In other words. 1 CR X creature is worth N XP. 2 of those creatures are worth 1.5N XP each. 3-6 are worth like 2N XP each. So what you want is a couple to a handful of monsters with lower CRs than the party. Grab like 3-6 CR 3s.
Dungeon Masters Guide, pages 81 through 85 (especially page 82) explain what Bawylie is talking about. There you'll find charts and the math showing how to build varying degrees of Encounter Difficulties for the characters in your game.
Thanks. I didn't have the info on me bc I'm at work.
My books are at home as well, but I keep a PDF handy while working.
Jaxom wrote:
The actual encounter building system is based upon the XP total value of monsters of all the monsters in the encounter, this number is then futher multiplied by a number based upon the total number of monsters in the encounter.
The encounter building system itself available in the DM Basic PDF free download:
http://media.wizards.com/2014/downloads/dnd/DMBasicRulesv.0.3.pdf
Pages 56-58
Challenge Rating determines how much XP the monster is worth (note a few monsters appear to have the wrong amount in MM, awkwardly*), and is also a useful "You must be this tall to fight this monster" guideline.
From my poke of the maths, 1 CR X creature is a "hard" encounter for 4 level X players. The maths might be a little out at some levels of course.
One thing that kinda some people miss is what the encounter difficulty catagories, noticably Deadly isn't meant to be likely TPK territory, but instead an encounter with a serious risk of a character dying.
Combat Encounter Difficulty
There are four categories of encounter difficulty.
Easy. An easy encounter doesn’t tax the characters’ resources or put them in serious peril. They might lose a few hit points, but victory is pretty much guaranteed.
Medium. A medium encounter usually has one or two scary moments for the players, but the characters should emerge victorious with no casualties. One or more of them might need to use healing resources.
Hard. A hard encounter could go badly for the adventurers. Weaker characters might get taken out of the fight, and there’s a slim chance that one or more characters might die.
Deadly. A deadly encounter could be lethal for one or more player characters. Survival often requires good tactics and quick thinking, and the party risks defeat.
Thanks for the replies everyone. I don't have a copy of the DMG yet, bu the link to the Basic PDF helps 
Thanks again.
In addition to the math in the DMG consider the skill level of your players, PCs stats, and character mix. I had my players roll stats, which resulted in values much higher than the standard array. In addition the party consists of a paladin, barbarian, warlock, and sorc. The result of the high stats, player experience, and character mix allows them to fight at one level higher than listed on the chart. In other words, if they are at level five then I design for the encounter as though they are level six. It took me about three encoutners to estimate and verify their effective combat level. The metric I used was: a hard encounter results with the orc paladin going down only once and getting back up ready to fight for several more rounds and the rest of the party is in pretty good shape; a deadly encounter results with the paladin down, being dragged to safety, and fead a healing potion, while the rest of the party is near half health or below.
bawylie wrote:
Ranthalan wrote: