Pine Script Risk Management Tool

Here’s a Pine Script implementation for a risk management tool that automates position sizing based on 1% account risk per trade. The script dynamically calculates position size based on account balance, ATR-based stop-loss levels, and a configurable take-profit multiple. It includes visual aids and real-time alerts. ### Pine Script Code: ```pinescript //@version=5 indicator("Risk Management Tool", overlay=true) // === Inputs === // Account settings account_balance = input.float(title="Account Balance ($)", defval=10000, tooltip="Your total trading account balance.") // Risk management risk_percent = input.float(title="Risk per Trade (%)", defval=1, minval=0.1, maxval=100, tooltip="Percent of account balance to risk per trade.") take_profit_multiple = input.float(title="Take Profit Multiple (x ATR)", defval=2, tooltip="Take profit level as a multiple of ATR.") atr_multiplier = input.float(title="Stop-Loss ATR Multiplier", defval=1.5, tooltip="Stop-loss distance as a multiple of ATR.") // ATR settings atr_length = input.int(title="ATR Length", defval=14, minval=1, tooltip="Length for ATR calculation.") // === Calculations === // Average True Range (ATR) atr = ta.atr(atr_length) // Entry Price (current close for simplicity, replace with strategy-specific logic if needed) entry_price = close // Stop-loss and Take-profit levels stop_loss = entry_price - atr * atr_multiplier take_profit = entry_price + atr * take_profit_multiple // Risk per trade (in dollars) risk_dollars = (account_balance * risk_percent) / 100 // Position size calculation (contracts or shares) position_size = risk_dollars / (entry_price - stop_loss) // === Visual Aids === // Plot stop-loss level line.new(bar_index[1], stop_loss, bar_index, stop_loss, color=color.red, width=1, style=line.style_dotted, extend=extend.right, title="Stop Loss Line") // Plot take-profit level line.new(bar_index[1], take_profit, bar_index, take_profit, color=color.green, width=1, style=line.style_dotted, extend=extend.right, title="Take Profit Line") // Plot entry level line.new(bar_index[1], entry_price, bar_index, entry_price, color=color.blue, width=1, style=line.style_solid, extend=extend.right, title="Entry Level Line") // === Alerts === // Notify when close price approaches stop-loss if ta.crossover(close, stop_loss) alert("Warning: Price is approaching the stop-loss level!", alert.freq_once_per_bar) // Notify when close price approaches take-profit if ta.crossover(close, take_profit) alert("Good news: Price is nearing the take-profit level!", alert.freq_once_per_bar) // === Display Position Size === label.new(bar_index, high, "Position Size: " + str.tostring(position_size, "#.##") + " units", style=label.style_label_down, color=color.new(color.white, 90)) // === Comments === // 1. ATR is used for dynamic stop-loss and take-profit calculation. // 2. Risk per trade determines the maximum loss in dollar terms based on account balance. // 3. Position size adjusts dynamically to ensure the dollar risk matches the configured percentage. // 4. Visual lines and alerts provide key levels and real-time notifications. ``` ### How It Works: 1. **Inputs**: The user sets account balance, risk percentage, ATR-based stop-loss, and take-profit multiples. 2. **Dynamic Calculations**: - Stop-loss is calculated based on ATR. - Take-profit is set as a multiple of ATR. - Position size ensures risk per trade is capped at the user-defined percentage. 3. **Visual Aids**: Labeled lines are plotted for entry, stop-loss, and take-profit levels. 4. **Alerts**: Real-time alerts notify users when price nears the stop-loss or take-profit levels. ### Notes: - Replace the `entry_price` variable with the actual strategy's entry point logic. - Adjust the script for specific instruments or broker limitations (e.g., lot size, leverage). - Always backtest thoroughly before using the script live.