```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.