Pine Script Risk Management Tool

Here’s a Pine Script code that implements the risk management tool you requested. This script calculates position size and stop-loss levels based on a fixed 2% risk per trade, using ATR for determining stop-loss levels. It includes visualization on the chart, alerting mechanisms, and parameters to customize the strategy for swing trading. ```pinescript //@version=5 strategy("Fixed Percentage Risk Management", overlay=true, default_qty_type=strategy.percent_of_equity, default_qty_value=2) // Parameters for the risk management risk_percentage = input.float(2, title="Risk Percentage Per Trade", minval=0.1, step=0.1) // 2% risk per trade atr_period = input.int(14, title="ATR Period", minval=1) atr_multiplier = input.float(1.5, title="ATR Multiplier for Stop-Loss", minval=0.5, step=0.1) use_high_volatility = input.bool(true, title="Use High Volatility Filter (ATR > SMA(ATR))") high_volatility_period = input.int(14, title="High Volatility ATR SMA Period", minval=1) backtest_period = input.time(timestamp("2024-02-01 00:00"), timestamp("2024-08-31 23:59"), title="Backtest Period") // ATR Calculation atr = ta.atr(atr_period) sma_atr = ta.sma(atr, high_volatility_period) is_high_volatility = atr > sma_atr // Calculate position size based on risk percentage and ATR stop-loss account_balance = strategy.equity stop_loss_pips = atr * atr_multiplier risk_amount = account_balance * (risk_percentage / 100) position_size = risk_amount / stop_loss_pips // Visualization and alerts var line entry_line = na var line stop_loss_line = na var label risk_label = na // Function to place trade with risk management if (use_high_volatility and is_high_volatility) or not use_high_volatility if ta.crossover(ta.sma(close, 50), ta.sma(close, 200)) // Example entry condition: Golden Cross strategy.entry("Long", strategy.long, qty=position_size) stop_loss_price = close - stop_loss_pips // Plot Entry and Stop Loss Lines line.delete(entry_line) line.delete(stop_loss_line) entry_line := line.new(x1=bar_index, y1=close, x2=bar_index + 1, y2=close, color=color.green, width=2) stop_loss_line := line.new(x1=bar_index, y1=stop_loss_price, x2=bar_index + 1, y2=stop_loss_price, color=color.red, width=2) // Alert if risk exceeds tolerance if position_size * stop_loss_pips > risk_amount alert("Risk exceeds 2% of account balance!", alert.freq_once_per_bar_close) // Risk Information Label label.delete(risk_label) risk_label := label.new(x=bar_index, y=close, text="Risk: $" + str.tostring(risk_amount) + "\nPosition Size: " + str.tostring(position_size) + "\nStop Loss: " + str.tostring(stop_loss_price), style=label.style_label_down, color=color.white, textcolor=color.black, size=size.normal) // Exit trade when stop-loss is hit strategy.exit("Exit", "Long", stop=stop_loss_price) // Backtest logic strategy.close("Long", when=time > backtest_period[1]) ``` ### Script Features Explained: - **Risk Calculation**: The script calculates position size based on a fixed 2% risk of the account balance. - **Stop-Loss**: Stop-loss is calculated using the ATR (Average True Range) with a multiplier. You can adjust the multiplier for swing trading. - **High Volatility Filter**: A condition to trade only when the ATR is above its simple moving average, which indicates high volatility. - **Visualization**: The script plots the entry and stop-loss levels directly on the chart and shows risk information in a label. - **Alerts**: The script triggers an alert when the trade risk exceeds the defined 2% risk. - **Custom Parameters**: You can adjust parameters like ATR period, ATR multiplier, and whether to use the high volatility filter. - **Backtesting**: The script can backtest the strategy over a defined period (last 6 months in this example). ### How to Use: 1. Copy and paste this script into TradingView's Pine Script editor. 2. Customize the parameters according to your trading style. 3. Add it to the chart to see how it manages risk based on your settings. 4. Run the backtest for the last 6 months to evaluate the strategy's performance. ### Additional Notes: - This script assumes a simple crossover as an entry condition, but you can modify it with your preferred trading logic. - Ensure that alerts are properly set up in TradingView to get notified if the risk exceeds your predefined threshold. This tool provides a solid foundation for risk management in swing trading. You can modify it further to suit more specific requirements or trading strategies.