Risk Management Tool

September 14, 2021

Good money management is one of the fundamental pillars of successful trading. With this indicator, we propose a simple way to manage trading positions.

Good money management is one of the fundamental pillars of successful trading. With this indicator, we propose a simple way to manage trading positions. This tool can show Profit & Loss (P&L), suggest position size given a certain risk, set stop losses and take profits using fixed price value/percentage/ATR/Range, and can determine entries from crosses with technical indicators which is particularly handy if you don't want to set an entry manually.

Settings

Position Type: Determines if the position should be a "Long" or "Short" one.
Account Size: Determines the total capital of the trading account.
Risk: The maximum risk amount for a trade. Can be set as a percentage of the account size or as a fixed amount.
Entry Price: Determine the entry price of the position.
Entry From Cross: When enabled, allows to set the entry price where a cross with an external source was produced.

Stop Loss/Take Profit

Take Profit: Determine the take profit level, which can be determined by a value or percentage.
Stop Loss: Determine the stop loss level, which can be determined by a value or percentage.

Usage

One of the main usages of position management tools is to determine the position size to allocate given a specific risk amount and stop-loss. 2% of your capital is often recommended as a risk amount.

Our tool allows setting stop losses and take profits with different methods.

The ATR method sets the stop loss/take profit one ATR away from the entry price, with the ATR period being determined in the drop-down menu next to the selected methods. The range method works similarly but instead of using the ATR, we use a rolling range with a period determined in the drop-down menu next to the selected methods.

Unlike the available position management tool on tradingview, entry can be determined from the cross between the price an an external source. The image above show's entries from the Volatility Stop indicator. This is particularily useful if you set position based on a trailing stop.


Other Stories

Say Hello To V5 and A New Toolkit!

5/23/2022
New Feature
Indicator
Educational

It's finally here! The version 5 of the Lux Algo Premium as well as the Lux Algo Premium Oscillators have been released, alongside a brand new toolkit. Let's explore what's new!

Circular Barplot - Oscillators Sentiment

5/13/2022
New Feature
Indicator
Educational

This indicator is an implementation of a circular barplot aiming to return the market sentiment given by multiple normalized oscillators. These include the relative strength index ( RSI ), Stochastic %K (%K), Linear Correlation Oscillator (ROSC), William Percent Range (WPR), Percent Rank (%R), and money flow index ( MFI ).