---
title: Risk/Reward drawing tool
description: "Risk/Reward tool helps you to calculate the position size based on the maximum risk you are willing to take opening the position, as well as estimate the Profit & Loss (PnL) and calculate the value of your account balance once…"
url: "https://www.overcharts.com/en/helpcenter/docs/risk-reward-drawing-tool/"
updated: "2022-06-10"
category: Charts / Drawings
---

# Risk/Reward drawing tool

Risk/Reward tool helps you to calculate the position size based on the maximum risk you are willing to take opening the position, as well as estimate the Profit & Loss (PnL) and calculate the value of your account balance once the profit-target or stop-loss will be reached.

### **How to use it**

**1**) Start inserting the tool:

- by pressing *Risk/Reward* button on drawings toolbar
- or by selecting from Workspace window the *Insert* menu > *Drawing* > *Risk/Reward*

![](https://www.overcharts.com/en/helpcenter/wp-content/uploads/2022/06/risk-reward-toolbar1.jpg)

**2**) Draw Position Entry, Profit-Target and Stop-Loss levels on chart

![](https://www.overcharts.com/en/helpcenter/wp-content/uploads/2022/06/risk-reward-overview2.jpg)

**3**) Calculate position size based on the maximum risk you are willing to take

If you already **know the position size** then set the following properties in drawing tool configuration:

**Calculation Method**: Fixed

**Value**: enter the Position Size (quantity)

![](https://www.overcharts.com/en/helpcenter/wp-content/uploads/2022/06/risk-reward-ps-fixed1.jpg)

If you want to **automatically calculate** the **position size** based on the maximum risk you are willing to take, set the following properties in drawing tool configuration:

**Account Size**: set the account balance (total cash amount of your account)

**Calculation Method**: Automatic

**Risk**: The sum you are willing to lose in the position can be calculated in two ways:

- **Cash**: set the maximum loss cash amount
- **Percentage**: set the percentage of Account-Size that you are willing to lose

![](https://www.overcharts.com/en/helpcenter/wp-content/uploads/2022/06/risk-reward-ps-auto-cash1.jpg)

![](https://www.overcharts.com/en/helpcenter/wp-content/uploads/2022/06/risk-reward-ps-auto-perc1.jpg)

### **Further information**

Let’s see in detail all information available and how it is calculated:

![](https://www.overcharts.com/en/helpcenter/wp-content/uploads/2022/06/risk-reward-overview1.jpg)

1 = Entry, Target, Stop Price Levels

2 = Profit or Loss once the profit-target or stop-loss levels are reached

3 = Account balance once the profit-target or stop-loss levels are reached

| **LONG POSITION** |  |
| --- | --- |
| Account Balance on profit-target level | Amount = AccountSize + (ProfitLevel – EntryPrice) * PointValue * Qty |
| Account Balance on stop-loss level | Amount = AccountSize – (EntryPrice – StopLevel) * PointValue * Qty |

| **SHORT POSITION** |  |
| --- | --- |
| Account Balance on profit-target level | Amount = AccountSize + (EntryPrice – ProfitLevel) * PointValue * Qty |
| Account Balance on stop-loss level | AccountSize – (StopLevel – EntryPrice) * PointValue * Qty |

4 = Current Position Profit & Loss (PnL)

5 = Position Size (quantity)

| ****LONG POSITION**** |
| --- |
| Qty = Risk / ((EntryPrice – StopPrice) * PointValue) |

| ****SHORT POSITION**** |
| --- |
| Qty = Risk / ((StopPrice – EntryPrice) * PointValue) |

6 = Risk/Reward Ratio = ProfitOnTarget / LossOnStop

### **Videos**

[https://www.youtube.com/embed/AJCBXygBfO8?rel=0](https://www.youtube.com/embed/AJCBXygBfO8?rel=0)