Risk Management

The Risk Management tool provides a visual framework for calculating position sizes and managing trade risk directly on the chart. It automatically computes optimal entry sizes based on capital and leverage while visualizing risk-to-reward ratios and real-time PnL tracking to ensure disciplined execution.

Usage

The Usage section describes how the script can be used to plan and monitor trades. Users must first define their trade parameters by selecting an Entry Price, Stop Loss, and Take Profit level directly on the chart using the interactive confirmation prompts.

Once the levels are set, the indicator calculates and displays:

• Position Sizing: The required size to match your defined risk percentage.
• Risk-to-Reward (R:R): A visual label at the entry line showing the current ratio.
• Visual Zones: Green and red filled regions representing the target and invalidation zones.
• Alerts: Optional notifications for when price touches entry or exit levels.

Market vs. Limit Detection

The indicator distinguishes between pending orders and active positions. If a "Market Entry" warning appears, it indicates that the current price action suggests the entry level has already been passed or filled based on the opening price of the candle. In such cases, the indicator pivots to tracking the PnL of the existing position rather than waiting for a limit touch.

Details

The script uses a price-action-based logic to determine entry and exit states. It tracks whether the high or low of a candle has intersected with the user-defined levels to trigger "Buy" or "Sell" signals.

Calculation Logic:

• Risk Amount: Total Capital × (Risk % / 100).
• Position Size: Calculated by dividing the Risk Amount by the distance to the Stop Loss.
• Leverage Application: The margin requirement and PnL are adjusted based on the user-selected leverage (1x to 125x).
• Real-time PnL: Once an entry is detected, the script tracks the percentage and absolute currency value of the floating profit or loss.

Settings

Capital & Risk

• Total Capital: Your total account balance used for calculations.
• Risk %: The maximum percentage of total capital you are willing to lose if the stop loss is hit.
• Currency: Select the symbol for visual display in labels and tables (e.g., USD, BTC, EUR).

Position Settings

• Leverage: The multiplier applied to the position size to determine required margin.
• Select Entry/Stop/TP: Interactive price inputs to define trade geometry.

UI & Chart Colors

• Entry/Stop/Take Profit Lines: Customizes the colors of the horizontal price levels.
• Warning Color: Color used when a "Market Entry" is detected.
• Fill Colors: Adjusts the transparency and hue of the TP/SL zones.
• Table UI: Customizes background and text colors for the information panel.

Transparency & Display

• Enable Transparency: Toggles visual transparency for lines and labels.
• Table Position: Moves the data table to different corners of the chart.

FAQ

How do I adjust the trade levels after they are set? You can change the levels by opening the indicator settings and re-selecting the price inputs for Entry, Stop Loss, or Take Profit.

Why did I get a "Market Entry" warning? This occurs when the script detects that the current candle opened beyond your entry price (above for shorts, below for longs), suggesting the entry point has already been breached.

How do I access Risk Management? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.