Three entry methods, kept separate
The entry trigger can be the close of the confirmation candle, a retest of the level, or a simulated limit order at a chosen price. They produce different results, so pick one, label it, and do not mix them in the same backtest.
Planning a 2R trade
Stop at the invalidation point
The stop goes where the idea is proven wrong. For a bullish sweep that is below the sweep low; for a bearish sweep, above the sweep high. Add a small buffer based on volatility (for example 0.25 × ATR) so normal noise does not stop you out. Never move the stop to make the reward-to-risk look better.
A planned trade on gold, and what happened
Target at the next opposing level
The first target is the next relevant opposing liquidity level: the Asia high or PDH for a long, the Asia low or PDL for a short, or a configured R-multiple. Reward-to-risk is the distance to the target divided by the distance to the stop, after estimated spread, fees and slippage. The default minimum is 2:1. It is a filter, not a promise of profit.
If the nearest target is too close, the right answer is to skip the trade, not to pick a further target that price has not shown any reason to reach.
Reward-to-risk and position size calculator
Calculated in your browserEnter your own numbers. The result is calculated in your browser and nothing is saved.
Planned reward-to-risk after costs
2.33R
Meets your minimum
Amount at risk
200
Position size (units)
100
The numbers are example inputs: replace them with your own. Contract size, tick value and leverage differ by instrument and broker and are not included, so check them before using a size anywhere real.
Position size from risk
Size comes from how much of the account you are willing to lose if the stop is hit: size = (equity × risk %) ÷ stop distance, adjusted for the instrument's contract size. If the stop distance or the contract specification is unknown, no size can be calculated, and the playbook does not invent one. Never increase risk after a loss.
Bullish example
- 1Entry: close of the bullish displacement candle after the reclaim.
- 2Stop: below the sweep low minus 0.25 × ATR.
- 3Target: the Asia high or PDH, whichever is nearer above.
- 4Reward-to-risk after costs ≥ 2.0? If not, skip.
Bearish example
- 1Entry: close of the bearish displacement candle after the reclaim.
- 2Stop: above the sweep high plus 0.25 × ATR.
- 3Target: the Asia low or PDL, whichever is nearer below.
- 4Reward-to-risk after costs ≥ 2.0? If not, skip.
What confirms it?
- The stop sits beyond a real structural extreme.
- The target is an actual level on the chart.
- Reward-to-risk after costs meets the minimum.
- Position size can be calculated from known inputs.
What invalidates it?
- Stop placement is unclear.
- The nearest target gives less than the minimum reward-to-risk.
- Costs or slippage make the trade impractical.
Common mistakes
- Placing the stop at a round number instead of beyond the sweep extreme.
- Choosing a distant target to make the numbers work.
- Ignoring spread and fees on small stop distances.
- Raising risk after a loss to win it back.
- Guessing position size without the contract specification.
Replay exercise
- Use the calculator above with the numbers from a setup you found in replay.
- Change only the target to the next real level on the chart and see whether the trade still meets 2:1.
- In the simulator, place the trade only if it does, and log the planned R in your journal.
Quick quiz
Pick an answer to see the explanation. Nothing is saved.