Stop loss calculator

How do you calculate a stop loss price?

Work out the stop distance per share, then subtract it from the entry for a long trade or add it for a short one: long stop = entry - distance, short stop = entry + distance. The calculator gives three ways to set the distance:

• A percentage: distance = entry x percentage.
• Money you are willing to lose: distance = that amount / the number of shares.
• A price distance: typed in directly, usually from a level on the chart.

With the default inputs, a buy at $80 and a 6% stop gives a distance of $4.80, so the stop goes at $75.20. On 50 shares, a $4,000 position, a fill at the stop loses $240. A take-profit at 2R, twice the stop distance above the entry, sits at $89.60 and would gain $480.

Each input moves the stop in a simple way. A higher percentage or price distance moves it further from the entry. In the money method, more money at risk moves it further away, while more shares pull it closer, because the same cash loss is spread over more of them.

Stop loss percentage: what each level costs

A percentage stop scales with the price, so the same setting means a wider stop on a higher-priced stock. Here is a buy of 50 shares at $80 with the stop at different percentages below the entry:

The last column shows why wide stops cost more than their percentage suggests: a fall of 20% needs a 25% rise to get back, because the rise is measured from the lower price. A percentage is easy to apply but ignores how much the stock normally moves; a 2% stop on a stock that often moves 4% in a day sits inside its ordinary daily range.

Stop loss from the money you are willing to lose

When the share count is already fixed, perhaps because you already own the shares, the question turns around: where must the stop go so that a fill there loses no more than a set amount? The answer is distance = money / shares.

Holding 120 shares bought at $25 and willing to lose $300, the distance is 300 / 120 = $2.50, so the stop goes at $22.50, which is 10% below the entry. Hold twice as many shares with the same $300 limit and the stop has to sit twice as close, at $23.75.

This is the mirror image of position sizing, which fixes the stop first and works out the shares. If you have not bought yet and the chart already tells you where the stop belongs, the position size calculator answers the other half of the question.

Stop loss for a short trade

A short position loses when the price rises, so its stop sits above the entry and its take-profit below. Choose Short and the calculator adds the distance instead of subtracting it.

Pound example. Short 200 shares at £12.40 with a stop £0.60 away, chosen from the chart. The stop goes at £13.00 and a fill there loses £120. A take-profit at 2R sits at £11.20, which would gain £240. From the stop, the price would have to fall 4.62% to get back to the entry.

Short stops carry one extra exposure: there is no ceiling on how far a price can rise, so a gap above the stop has no natural limit the way a long position's loss is capped at the full entry price.

Adding a take-profit from an R multiple

The take-profit field measures the target in multiples of the stop distance, written R. On the default trade one R is $4.80, so the take-profit sits at:

Setting the target this way keeps it tied to the risk, so moving the stop moves the target with it. Euro example: 300 shares bought at €45.50 with an 8% stop give a stop of €41.86 and a loss of €1,092 at the stop; at 2R the take-profit is €52.78. To see the win rate a given multiple needs, use the risk reward calculator.

Why a stop can fill beyond its price

The US Securities and Exchange Commission's page Stop Order (modified 10 March 2011) describes a stop order, also called a stop-loss order, as an order to buy or sell once the price reaches the stop price, at which point it becomes a market order. A market order takes the next price available, and that is not always the stop price.

If news comes out overnight and the stock opens below your stop, the order fills at or near the opening price. On the default trade, a stop at $75.20 with the stock opening at $72.00 fills at around $72, so 50 shares lose $400 instead of the planned $240, two thirds more. The chart under the calculator shows the loss if the fill lands 25%, 50% or 100% further from the entry than the stop: $300, $360 and $480 on the default inputs.

In the UK, GOV.UK's guidance on tax when you buy shares says you usually pay 0.5% on the transaction, based on the price you pay. On a £4,000 purchase that is £20, so a stop that loses £240 in price leaves you £260 down in total. Stop orders on other platforms and in other markets follow their own rules, so read how your platform handles them before relying on one.

How to calculate a stop loss in Excel or Google Sheets

With the entry in B2 and the stop percentage in C2 written as a decimal, a long stop is =B2*(1-C2) and a short stop =B2*(1+C2). For the money method, with the cash limit in D2 and the shares in E2, the long stop is =B2-D2/E2. The loss at the stop for any stop price in F2 is =ABS(B2-F2)*E2, and a long take-profit at R multiples in G2 is =B2+G2*ABS(B2-F2). For the default trade these give $75.20, a $240 loss and $89.60 at 2R.

Common stop loss mistakes

• Putting the stop on the wrong side. A short stop below the entry closes a winning trade, not a losing one; the calculator flags it.
• Using one percentage for every stock. The same percentage can sit outside a quiet stock's usual daily range and inside a volatile one's.
• Forgetting the share count. A 6% stop on 50 shares and on 500 shares are very different amounts of money.
• Treating the stop price as the exit price. It is the trigger, and gaps can fill the order beyond it.
• Widening the stop once the trade moves against you. The loss you planned for no longer applies.
• Leaving out costs. Commission, spread and purchase duty all come on top of the price loss.

What this calculator leaves out

It works out a stop price, the loss at that price and an optional take-profit from the numbers you enter. It does not know the stock's price history, so it cannot say whether a stop sits inside the normal daily range. It holds no live prices. It does not include commission, spread, borrowing costs on a short or tax, and it cannot predict where a gapped order will fill; the gap chart is an illustration on your own numbers. For forex lots and futures contracts, where each unit moves by more than the price change, the money figures need the contract multiplier first.

Glossary

Stop loss order: an order to close a position once a set price trades. Stop distance: the gap between the entry and the stop, per share. Take-profit: a price at which you plan to close a winning trade. R multiple: a distance or result measured in units of the stop distance. Gap: a jump between one trade and the next, often between one session's close and the next open. Slippage: the difference between the stop price and the price the order actually filled at.

Frequently asked questions

Courses on exits and stops

Sources and review