Example output
```pinescript
//@version=5
strategy("Risk Management Strategy - 2% Risk & 2:1 R/R",
overlay=true,
default_qty_type=strategy.percent_of_equity,
default_qty_value=100, // We'll handle position sizing manually
initial_capital=10000,
currency=currency.USD)
// ==============================
// User Inputs
// ==============================
// Account Balance Input
account_balance = input.float(title="Account Balance ($)", defval=10000, minval=100)
// Risk Percentage Input
risk_percentage = input.float(title="Risk Percentage (%)", defval=2, minval=0.1, maxval=100)
// Stop-Loss Distance in Pips
stop_loss_pips = input.int(title="Stop-Loss Distance (pips)", defval=50, minval=1)
// Take-Profit Ratio (2:1)
risk_reward_ratio = 2
// =====================================
// Calculate Position Size
// =====================================
// Calculate the amount risked per trade in dollars
risk_amount = account_balance * (risk_percentage / 100)
// Define pip size based on the symbol
// For most Forex pairs, 1 pip = 0.0001
// Adjust if necessary for different symbols
pip_size = 0.0001
// If the symbol is JPY pair, pip is 0.01
if (str.contains(syminfo.symbol, "JPY"))
pip_size := 0.01
// Calculate the stop-loss in price
// Assuming a long position
stop_loss_price = close - (stop_loss_pips * pip_size)
// Calculate the take-profit in price based on Risk-Reward Ratio
take_profit_pips = stop_loss_pips * risk_reward_ratio
take_profit_price = close + (take_profit_pips * pip_size)
// Calculate pip value
// For Forex, pip value for standard lot (100,000 units) is typically $10
pip_value = 10
// Calculate position size in lots
// Position Size (lots) = Risk Amount / (Stop-Loss Pips * Pip Value)
position_size_lots = risk_amount / (stop_loss_pips * pip_value)
// Ensure position size is a whole number for lots
position_size_lots := math.round(position_size_lots * 1000) / 1000 // Round to 3 decimal places
// =====================================
// Plotting Position Size and Levels
// =====================================
// Display position size on the chart
var label posLabel = na
if (barstate.islast)
label.delete(posLabel)
posLabel := label.new(x=bar_index, y=high,
text="Position Size: " + tostring(position_size_lots) + " lots",
style=label.style_label_down, color=color.green, textcolor=color.white,
yloc=yloc.abovebar)
// Plot Stop-Loss Level
stop_loss_plot = plot(stop_loss_price, title="Stop-Loss", color=color.red, linewidth=2, style=plot.style_linebr)
// Plot Take-Profit Level
take_profit_plot = plot(take_profit_price, title="Take-Profit", color=color.blue, linewidth=2, style=plot.style_linebr)
// =====================================
// Trading Signals (Simple Moving Average Crossover)
// =====================================
// Define Moving Averages for Entry Signals
fast_ma_length = input.int(title="Fast MA Length", defval=10, minval=1)
slow_ma_length = input.int(title="Slow MA Length", defval=30, minval=1)
fast_ma = ta.sma(close, fast_ma_length)
slow_ma = ta.sma(close, slow_ma_length)
// Plot Moving Averages
plot(fast_ma, title="Fast MA", color=color.orange)
plot(slow_ma, title="Slow MA", color=color.purple)
// Generate Buy Signal: Fast MA crosses above Slow MA
long_condition = ta.crossover(fast_ma, slow_ma)
// Generate Sell Signal: Fast MA crosses below Slow MA
short_condition = ta.crossunder(fast_ma, slow_ma)
// Execute Buy Order
if (long_condition)
strategy.entry("Long", strategy.long, qty=position_size_lots * 100000)
// Set Stop-Loss and Take-Profit
strategy.exit("Take Profit/Stop Loss", from_entry="Long",
stop=stop_loss_price, limit=take_profit_price)
// Execute Sell Order
if (short_condition)
strategy.entry("Short", strategy.short, qty=position_size_lots * 100000)
// Set Stop-Loss and Take-Profit
strategy.exit("Take Profit/Stop Loss", from_entry="Short",
stop=stop_loss_price, limit=take_profit_price)
// =====================================
// Alerts
// =====================================
// Alert Condition for Stop-Loss Hit
sl_hit = strategy.closedtrades.size > 0 and
strategy.closedtrades.exit_reason(strategy.closedtrades.size - 1) == strategy.exit_reason.stop
if (sl_hit)
alert("Stop-Loss triggered!", alert.freq_once_per_bar_close)
// Alert Condition for Take-Profit Hit
tp_hit = strategy.closedtrades.size > 0 and
strategy.closedtrades.exit_reason(strategy.closedtrades.size - 1) == strategy.exit_reason.limit
if (tp_hit)
alert("Take-Profit triggered!", alert.freq_once_per_bar_close)
// =====================================
// Backtesting Settings
// =====================================
// Ensure the strategy runs over the last 1 year
// This is handled by TradingView's backtest engine based on chart's timeframe and date range
// =====================================
// Risk-Reward Visualization
// =====================================
// Optionally, fill the area between entry, stop-loss, and take-profit for visual clarity
if (long_condition)
line_entry = line.new(x1=bar_index, y1=close, x2=bar_index + 1, y2=close,
color=color.green, width=1, style=line.style_dotted)
line_sl = line.new(x1=bar_index, y1=stop_loss_price, x2=bar_index + 1, y2=stop_loss_price,
color=color.red, width=1, style=line.style_dotted)
line_tp = line.new(x1=bar_index, y1=take_profit_price, x2=bar_index + 1, y2=take_profit_price,
color=color.blue, width=1, style=line.style_dotted)
// Optionally, add fills or other visual elements
// =====================================
// End of Script
// =====================================
```
### **Explanation of the Script:**
1. **Strategy Declaration:**
- The script is defined as a strategy to enable backtesting.
- It overlays on the main chart and sets an initial capital of $10,000.
2. **User Inputs:**
- **Account Balance:** Allows the trader to input their account balance (default is $10,000).
- **Risk Percentage:** The percentage of the account balance the trader is willing to risk per trade (default is 2%).
- **Stop-Loss Distance:** The distance for the stop-loss in pips (default is 50 pips).
- **Risk-Reward Ratio:** Set to 2 for a 2:1 risk-reward ratio.
3. **Position Size Calculation:**
- **Risk Amount:** Calculates the dollar amount to risk per trade based on the account balance and risk percentage.
- **Pip Size:** Defines the pip size based on the symbol. For most Forex pairs, 1 pip = 0.0001. Adjusts to 0.01 for JPY pairs.
- **Stop-Loss Price:** Calculates the stop-loss price based on the current close minus the stop-loss distance in pips.
- **Take-Profit Price:** Calculates the take-profit price based on the risk-reward ratio.
- **Pip Value:** Assumes a pip value of $10 per standard lot.
- **Position Size (Lots):** Determines the number of lots to trade based on the risk amount, stop-loss pips, and pip value.
4. **Plotting:**
- **Position Size Label:** Displays the calculated position size on the chart.
- **Stop-Loss and Take-Profit Levels:** Plots horizontal lines on the chart to indicate stop-loss and take-profit levels.
5. **Trading Signals:**
- **Moving Averages:** Uses simple moving averages (fast and slow) to generate buy and sell signals.
- **Entry Conditions:** Enters a long position when the fast MA crosses above the slow MA and a short position when the fast MA crosses below the slow MA.
- **Exits:** Sets stop-loss and take-profit levels for each trade based on the calculated prices.
6. **Alerts:**
- **Stop-Loss Alert:** Sends an alert when a stop-loss is triggered.
- **Take-Profit Alert:** Sends an alert when a take-profit is triggered.
7. **Backtesting:**
- The strategy is set to backtest over the last 1 year based on the chart's timeframe and date range.
8. **Risk-Reward Visualization:**
- Optionally, visual elements like dotted lines can be added to enhance the visualization of entry, stop-loss, and take-profit levels.
### **Usage Instructions:**
1. **Adding to TradingView:**
- Open TradingView and navigate to the Pine Script editor.
- Create a new script and paste the above code.
- Save and add the strategy to your chart.
2. **Customization:**
- Adjust the account balance, risk percentage, stop-loss pips, and moving average lengths through the input fields.
3. **Backtesting:**
- The strategy will automatically backtest over the available historical data. To focus on the last 1 year, adjust the chart's timeframe and date range accordingly.
4. **Alerts:**
- Set up alerts in TradingView based on the alert conditions defined in the script to receive real-time notifications when stop-loss or take-profit levels are hit.
### **Notes:**
- **Position Sizing:** The script calculates position size in lots. For Forex trading, 1 standard lot is typically 100,000 units of the base currency.
- **Symbol Compatibility:** Ensure the pip size is correctly defined for the symbols you are trading. The script adjusts for JPY pairs, but additional adjustments may be necessary for other instruments.
- **Risk Management:** Always ensure that the risk management parameters align with your overall trading strategy and risk tolerance.