How to calculate a stop loss
A stop loss is the price where you accept the trade idea was wrong. There are three common ways to set it, and this calculator does all three:
From a percent: Stop = Entry × (1 − Stop %) (1 + for shorts)
From volatility: Stop = Entry − ATR × Multiple (+ for shorts)
Take profit = Entry + (Entry − Stop) × Reward : risk
Which method should you use?
Money at risk
Best when your size is fixed (one lot, a set number of shares). It guarantees the loss — but check the stop isn’t sitting in the middle of normal price noise.
Percent
Simple for stocks and swing trades (e.g. 2–8%). The same percent can be too tight for a volatile stock and too loose for a quiet one.
ATR (volatility)
Gives the trade room in proportion to how much the market moves — 1.5–3 × ATR is common. Then size the position from that stop with the position size calculator.
Chart structure
Just beyond a swing low/high, support or resistance — where the idea is clearly wrong. Measure the distance, then check the money at risk here.
Stop-loss rules that save accounts
- Decide the stop before you enter — then the quantity, never the other way round.
- Never move the stop further away once you are in. Move it only to reduce risk (see trailing stop loss).
- Expect slippage. A stop-loss order turns into a market order when hit; in fast moves or gaps the fill can be worse.
- Check your broker’s order validity — some intraday stop-loss orders expire at the end of the day.
Frequently asked questions
How do you calculate a stop loss?
Decide the most you will lose and divide it by your quantity: entry − (max loss ÷ quantity) for a long, entry + (max loss ÷ quantity) for a short. You can also use a percentage of the entry price or a multiple of ATR.
What is a good stop-loss percentage?
There is no single number. Intraday traders often use well under 1–2%, swing traders 3–8% on stocks. A better test is whether the stop sits beyond normal price noise — which is what an ATR-based stop measures.
How do I set a take-profit level?
Multiply the stop distance by your reward-to-risk ratio and add it to the entry (subtract for shorts). With a 20-point stop and 1 : 2, the take-profit is 40 points away.
What is an ATR stop loss?
A stop placed a multiple of the Average True Range away from the entry, for example 1.5 or 2 × ATR. It widens in volatile markets and tightens in quiet ones.
Should I use a stop loss on every trade?
A stop — or a defined maximum loss — on every trade is what makes risk measurable. Without it a single trade can take far more than you planned.
See if your stops are in the right place
Profit Prism Journal records every stop and exit, measures each trade in R, and shows how often you hit the stop versus the target — per setup. Try it free for 7 days, no card.
Start the free trialFor education only. Not investment advice. Trading involves substantial risk of loss.