Position Sizing and Chart-Based Risk Planning with Fixed or ATR Stops
Summary
This ProRealTime indicator script is designed to help plan and monitor a trade on a price chart. Inputs include capital, a percentage risk allowance, entry and stop prices, a reward-to-risk ratio, and an option to adjust the stop using average true range. From these inputs, it estimates the distance to the stop, share quantity, position value, monetary risk, and a target price and gain. The script draws entry, stop, and target levels, shades risk and reward areas, and adds labels for trade values and recent daily price changes. It also marks a target crossing with an arrow and a winning-trade label.
The material is a code-oriented visualization aid rather than a tested trading strategy: it provides no market, instrument, backtest, or performance evidence. Its usefulness depends on correct input units and platform behavior. The formulas and displayed labels may not consistently express risk per share versus total account risk, and the ATR-adjusted stop calculation deserves careful review before use. Traders should verify position sizing, stop placement, and target logic against their own instrument and execution assumptions; chart annotations do not place orders or guarantee fills.
Key ideas
- Position size is estimated from capital, a risk percentage, entry price, and stop distance.
- A reward-to-risk input determines a projected target price and gain estimate.
- An optional ATR adjustment changes the stop reference, while chart graphics show entry, stop, and target levels.
- Labels summarize position and risk figures alongside recent daily price changes.
- The script supplies no performance evidence, and its sizing formulas and units require verification.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.