In the example above, I've added this indicator the the chart.
I then specified:
- Risk Amount ($) = $500. (The max amount I'm willing to risk.)
- Risk Source = (another indicator) Lower Limit 3. (See Lower Limits for more details)
- Source Risk (%) = 0.0 (The default is 5.0 expecting the Risk Source to be the close.**)
Based upon how much I'm willing to risk, and the price difference between the close and Risk Source, this indicator will show the number of shares to purchase such that if the price drops to the stop level specified, my value loss should be limited to the Risk Amount.
333 shares is the value calculated for this example (latest bar). You can easily see how many shares you need to purchase for the lastest bar as well as track the previous values on the chart and the indicator cursor data.
** WARNING: There's no magic here. It's just math. So if you specify another indicator as the source, the values could get a bit strange and if the price is very close to the stop level, the number of shares could be unreasonably high. To help avoid this you can increase the minimum percent.
- Improved label.
- Used Local Limit 4 instead with corrected parameters.
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.