Set up a Long or Short Position drawing
Choose Long Position or Short Position from the drawing toolbar and place it on the chart. Open its settings to enter exact prices. For a long plan, put the stop below entry and the target above it. Reverse those relationships for a short plan. Choose the levels from your trading rule before evaluating the ratio.
- Set Account Size and its currency, then Risk as a cash amount or percentage. Check Lot Size and Leverage for the instrument.
- Enter Entry Price, Profit Level, and Stop Level. Ticks specifies a distance from entry; Price specifies the level itself.
- Use QTY precision to inspect quantity rounding. It does not establish which order increments your broker accepts.
- In Style, check Stats and Always show stats if the labels disappear when the drawing is deselected.
Worked example: a hypothetical stock plan
Assume a USD 10,000 account, a 1% price-risk budget, entry at $50, stop at $48, and target at $54. For this illustration, one quantity unit is one share, lot size and point value are both 1, leverage is 1:1, and fees are initially excluded. These are invented inputs, not a trade recommendation or a market quote.
- For a short example with entry $50, stop $52, and target $46, the same distances produce the same gross ratio and price-risk quantity. Borrowing costs and availability require a separate check.
- A target twice as far away does not establish an edge. With only +2R wins and −1R losses, break-even is one win in three before costs; actual outcomes may differ from those two endpoints.
| Measure | Calculation | Result |
|---|
| Price-risk budget | $10,000 × 0.01 | $100 |
| Stop distance | $50 − $48 | $2 per share |
| Target distance | $54 − $50 | $4 per share |
| Reward divided by risk | $4 ÷ $2 | 2.0, or 2R |
| Risk-based quantity | $100 ÷ $2 | 50 shares |
| Position value at entry | 50 × $50 | $2,500 |
| Loss at the stated stop | 50 × $2 | $100 before costs |
| Profit at the stated target | 50 × $4 | $200 before costs |
Ticks, points, and contracts are different units
For a linear contract, money risk per contract equals stop distance in ticks × tick size × point value. Point value is the currency value of a one-point move per contract. A tick is a minimum price increment, not necessarily one point or one cent. Verify the exact symbol and contract specification before transferring a share example to derivatives.
- This contract example is risk arithmetic only. It does not establish available margin, exchange limits, or permission to trade nine contracts.
- A lot may bundle multiple underlying units. Reconcile Qty × Lot Size with the broker order unit; do not multiply by the same contract multiplier twice.
- If the calculated size is below the minimum order size, record that the plan cannot meet this budget under those constraints. Rounding up would increase risk.
- For a different account currency, convert the money risk into that currency using an explicit rate. Inverse or nonlinear contracts need their own payoff formula.
| Hypothetical contract input | Calculation | Result |
|---|
| Tick size 0.25; point value $5 | 0.25 × $5 | $1.25 per tick per contract |
| Stop distance 8 ticks | 8 × 0.25 | 2 price points |
| Risk per contract | 8 × $1.25 | $10 before costs |
| $95 price-risk budget; whole contracts only | Floor($95 ÷ $10) | 9 contracts; $90 price risk |
Why quantity can be lower than the risk calculation
TradingView selects the smaller of the risk-based quantity and the quantity allowed by the drawing leverage setting. The risk amount is therefore a ceiling in that calculation. Raising leverage changes a sizing constraint; it does not improve the setup or guarantee broker buying power.
- In the second row, 200 × $0.25 = $50 price risk, even though the configured budget is $100. The account constraint binds first.
- This buying-power calculation assumes point value and lot size of 1. For derivatives, verify the broker margin schedule separately instead of treating this stock formula as universal.
| Same hypothetical $10,000 stock account | Risk-based size | 1:1 budget limit | Selected size |
|---|
| $50 entry; $48 stop; $100 risk | 50 shares | $10,000 ÷ $50 = 200 shares | 50 shares |
| $50 entry; $49.75 stop; $100 risk | 400 shares | $10,000 ÷ $50 = 200 shares | 200 shares |
Recalculate after fees and execution assumptions
The published drawing P&L formulas use price difference, quantity, point value, and lot size. They do not subtract commission. The following is a separate sensitivity worksheet for the 50-share example, not a claim about a fee setting inside the drawing. Assume $1 commission on entry and $1 on exit, plus $0.02 adverse execution per share on each side.
- If $100 must include these assumed costs, solve quantity × ($2 + $0.04) + $2 ≤ $100. Whole-share quantity becomes 48; the modeled stop loss is $99.92.
- The allowance is an assumption, not a maximum loss. Gaps can produce worse fills. Spread already included in actual bid/ask fills must not be deducted a second time.
- When entry, stop, target, or quantity changes, repeat the calculation. A tighter stop can raise position size and transaction costs.
| Scenario | Stop loss including assumed costs | Target profit after assumed costs | Net reward/risk |
|---|
| No costs; exact planned fills | $100 | $200 | 2.00 |
| $2 round-trip commission | $102 | $198 | 1.94 |
| $2 commission + $2 execution allowance | $104 | $196 | 1.88 |
Separate a drawing, an order, and a strategy backtest
Creating the drawing is a planning action. TradingView also documents a Create limit order action in its context menu, which copies parameters into the order panel. When that action is available, inspect the connected account, symbol, quantity, and exit orders before submission. Confirm order status and fills in the trading account.
- A manually selected historical setup is not evidence of repeated strategy performance. Define the rule for every eligible entry before testing it.
- Save planned and realized risk separately. Moving the original stop in a journal to match a losing exit would erase the deviation you need to review.
| Record | What it establishes | What still needs checking |
|---|
| Position drawing | Chosen levels and a planned payoff | No submitted order or actual fill is established by the rectangle |
| Submitted broker or paper order | An instruction in the selected account | Acceptance, execution, exit protection, fees, and remaining quantity |
| Pine strategy test | Hypothetical trades from programmed rules and a broker emulator | Entry timing, sizing units, costs, fill assumptions, and unseen data |
Turn the checked plan into explicit rules
Pineify Pine Script AI Coding Agent can help write a strategy from a specification. Supply the entry condition, account-risk rule, stop calculation, quantity unit, rounding rule, target, and cost assumptions. Review the generated code and its TradingView results against a hand calculation before relying on the simulation.
- Ask for a rule when the computed size is zero or below the minimum, rather than allowing an unexplained larger order.
- State whether risk uses initial capital or current equity, and whether the stop distance is fixed at entry or changes later.
- Use Pineify Trading Journal to record the trade and retain the plan in notes. Compare the actual entry, exit, fees, and stop changes with that plan; this workflow does not assume automatic drawing import or order execution.
