How to Use TradingView Long and Short Position Tools: Risk, Reward and Position Size
TradingView’s Long Position and Short Position tools place three planning anchors—entry, stop and target—on a chart and visualize price distance and reward relative to risk. A neat green and red box does not mean an order was submitted, the quantity matches the contract, or the maximum loss is guaranteed. This guide separates anchor logic, long and short signs, the reward/risk formula, contract size, point value, quantity, currency, costs and slippage, then reconciles the drawing against SG Group’s independent lot-size and trade-cost tools.
Who this guide is for: Readers trying to understand the green/red position drawing, reconcile its ratio with money loss, or decide whether the displayed quantity can be trusted
Key points to understand first
- The Long/Short Position object is a drawing, not a broker order, guaranteed stop or price forecast.
- Reward/risk compares entry-to-target distance with entry-to-stop distance; it does not state win probability or expectancy.
- Money risk also needs contract size, point or pip value, P&L currency and conversion, which vary across assets.
- Spread, commission, slippage, gaps and financing change effective risk and break-even from the simple box geometry.
- Reconcile the drawing, an SG Group calculation and the official provider specification; resolve differences as unit problems.
Name the three prices before judging the box
Target minus entry; neither arrival nor profit is guaranteed.
Entry minus stop before gaps and friction.
Long and Short Position are planning drawings, not orders
TradingView’s Long Position and Short Position tools are drawings for placing an assumed entry, profit target and stop-loss level on a chart and displaying distance or reward/risk information. Long arranges a plan around a rise and Short around a decline, but placing either object does not necessarily submit an order. Keep the drawing and any open broker order distinct in the interface and journal, and verify current TradingView and broker-integration behavior.
The durable benefit is converting vague invalidation into a price and comparing that distance with a separate target. A high displayed ratio does not imply a high probability of reaching the target. Narrowing a stop to improve the ratio does not create an edge. If the stop sits inside ordinary noise, the target lacks evidence or quantity uses the wrong contract, the geometry remains neat while the plan is not reproducible.
Give entry, stop and target independent reasons
Entry is the price condition under which an order may be considered. Stop is an instruction associated with invalidation and loss control. Target is a condition for considering an exit. Their sequence matters. Starting with “I want 2R” and moving stop or target to manufacture it puts the ratio before the market observation. Define observation and invalidation first, identify a separately supported target, then calculate whether the resulting ratio belongs in the research rule.
| Anchor | Question first | Avoid | Evidence |
|---|---|---|---|
| Entry | What must be confirmed? | Snapping to current price | Condition, bar and time |
| Stop | What invalidates the hypothesis? | Narrowing to improve R:R | Price and trigger/close rule |
| Target | What observation supports exit? | Using a multiple alone | Zone, liquidity or rule |
| Quantity | What is scenario loss? | Accepting a default | Contract, point value and calculation |
The layout is an educational plan, not an order or recommendation.
For a conventional long, stop is below entry and target above; for a short, stop is above and target below. A reverse placement may indicate a tool or input error. Negative prices, inverse quotes, spread symbols and non-standard charts can make intuition less reliable, so identify the symbol and data transformation before using the simple box.
Recalculate R:R as a ratio of absolute distances
Absolute distances provide one formula for long and short. Risk distance is the gap between entry and stop; reward distance is the gap between target and entry; reward/risk divides the second by the first. A fictional long with entry 100, stop 96 and target 108 has risk 4, reward 8 and 2R. A short with entry 100, stop 104 and target 92 has the same geometry. Both are before costs and slippage.
Risk distance = |Entry price − Stop price|Reward distance = |Target price − Entry price|Reward / Risk = Reward distance ÷ Risk distanceIf risk distance is zero, the ratio is undefined. R:R does not state win probability or expectancy.A statement that 2R automatically works below a 50% win rate ignores realized average win and loss, friction, unfilled orders, partial exits and gaps. Moving a stop, scaling out or changing average entry changes the realized ratio. Store planned and realized R separately, and do not move the original anchors after the outcome is known.
If planned R:R is connected to a win rate, calculate break-even win rate separately as effective risk divided by effective risk plus effective reward. In a fictional case where spread, commission and assumed slippage change chart risk 4 and reward 8 into effective risk 4.5 and reward 7.5, the static break-even figure is 37.5%. That simplification assumes identical completed wins and losses and omits gaps, partial exits, unfilled orders, financing and tax. Record the distributions of planned and realized values instead of treating 37.5% as a safety threshold. A shared R:R across different intervals, sessions, liquidity conditions and order types does not make observations comparable, so preserve product, direction, setup, sample count and missing records with every summary.
Convert price distance into money risk
A price difference of four has no universal monetary meaning. One hundred shares, one FX lot, one index CFD contract and one gold CFD lot have different P&L per unit of price. Identify contract size, minimum increment, P&L per increment, quantity unit, P&L currency and account conversion. Account-size or risk fields in the drawing are only reliable when those assumptions match the provider specification.
Price risk = |Entry − Stop|Loss per one quantity = Price risk × P&L value per price unitScenario loss = loss per one quantity × quantity + estimated frictionRisk % = scenario loss ÷ account reference × 100Tax, gaps, negative balance, liquidation and conversion require separate checks.Enter account reference, acceptable loss, stop distance and point or pip value into the SG Group Lot Size Calculator, then compare its quantity with the drawing. The calculator mechanically uses entered assumptions; it does not recommend risk tolerance. If values disagree, return to contract size, lot and point value before changing a decimal.
Use absolute distance while checking direction-specific loss paths
Long price P&L is commonly expressed as exit minus entry, while short is entry minus exit. For risk-distance checking, use an absolute difference and verify that stop is on the loss side and target on the favorable side. Short loss is not theoretically capped at the entry price, and borrow, buy-in or other product-specific risks can apply. Leveraged products may also have different long and short financing or dividend adjustments.
| Direction | Entry | Stop | Target | Risk / Reward / R:R |
|---|---|---|---|---|
| Long | 100 | 96 | 108 | 4 / 8 / 2.0 |
| Short | 100 | 104 | 92 | 4 / 8 / 2.0 |
| Wrong-side example | 100 | 103 | 108 | Stop lies on favorable side for a long |
Prices are fictional. The same ratio does not make product risk, costs, probability or suitability equal.
Duplicating an object and reversing direction does not reverse the economic evidence. Gaps, short availability, financing and liquidity can be asymmetric. Record long and short as separate rules with separate invalidation and cost assumptions.
Spread and slippage change the effective ratio
A drawing uses one entry line, while an executable market has bid and ask. The price to buy a long, sell a short and trigger a protective order depends on provider rules. A wider spread changes immediate P&L and break-even even when the chart line is unchanged. A market, stop or limit order is not guaranteed to fill merely because a plotted line was touched.
Use the Trade Cost Calculator to combine entered spread, commission, holding cost and conversion in the account currency. Save a scenario that subtracts friction from planned reward and adds it to risk. Use several slippage assumptions for gaps or events. A single-color drawing cannot encode that uncertainty, so retain a note or separate table.
Reconcile the drawing, calculator and specification
Place the chart drawing beside the SG Group calculation and the provider or exchange specification. Reconcile symbol, entry, stop, target, quantity, contract size, point value, P&L currency, spread assumption and timestamp. If any field differs, do not retain only the favorable ratio. Resolve the unit discrepancy before freezing the version.
- Identify the symbol
Include venue, contract, expiry and currency.
- Place three anchors
Use observation for entry, invalidation for stop and separate evidence for target.
- Hand-check distances
Recalculate absolute risk, reward and reward/risk.
- Convert to money
Apply quantity and point value, then add friction to scenario loss.
- Freeze evidence
Store screenshot, inputs, specification version and timestamp under one plan ID.
Continue in Paper Trading to reconcile the drawing with an order ticket as separate objects. Do not use an alert as a guaranteed stop; design TradingView alerts as review notifications. The drawing organizes a plan but is not the entire risk-control system.
- Do not label a drawing as guaranteed profit or guaranteed loss limitation.
- Share R:R with symbol, interval, price side and timestamp, not as a context-free screenshot.
- Increment the version after a drawing change; do not overwrite a past plan to match results.
- Mark fictional examples and preserve the educational disclaimer.
Calculate price risk and reward/risk from three anchors
Enter three fictional prices. Quantity is retained for the next money-risk reconciliation, while this output covers price geometry only.
Excludes costs, slippage, gaps, contract multiplier and conversion. R:R is not win probability or expected return.
Frequently asked questions
Does placing a Long or Short Position drawing submit an order?
It is normally a drawing. Verify the order ticket and broker connection separately. Current interface and integration behavior should be checked in official TradingView material.
Does 2R guarantee profitability below a 50% win rate?
No. Realized average win and loss, costs, slippage, unfilled orders, partial exits and rule adherence all affect expectancy. Planned geometry is insufficient.
Can the displayed quantity be used directly?
Reconcile contract size, point or pip value, P&L currency and conversion with the official specification and an independent lot-size calculation.
Does the stop line cap maximum loss?
No guarantee exists. Gaps, slippage, halts, rejection and provider closeout can produce a fill beyond the line, and the drawing itself is not an order.
Is the risk identical for long and short when R:R is equal?
Not necessarily. Short availability, financing, dividend adjustments, gaps, liquidity and product terms can differ. Validate each direction separately.
Primary sources and verification links
- TradingView | How to use Long and Short Position drawing toolsOfficial explanation of placement, displays and settings for the drawings
- TradingView | Drawing tools available on TradingViewOfficial overview of drawing purposes, management and synchronization
- Investor.gov | Understanding Order TypesOfficial explanation of market, limit and stop conditions and lack of price guarantees
- Investor.gov | Understanding FeesOfficial investor education on how fees affect value and return
Edited and published by: SG Group · Editorial approach: We prioritize official TradingView Help Center and Pine Script documentation, then use exchange, regulator and other primary materials for market and product context. Features, data, pricing and connection terms change, so verify the current interface and linked sources before use.
Important notice: This article provides general education about TradingView interfaces, charts, alerts, screeners, paper trading and Pine Script. It is not investment advice, a trading signal, a recommendation of any instrument, data source or broker, or a guarantee of future price or profit. Features, pricing, data, exchange coverage, notifications, order integrations and Pine Script behavior vary by plan, region, connection and date and may change. Before risking money, verify current TradingView documentation and the terms of the relevant data source and connected provider, then rehearse the workflow with fictional data or paper trading.