Stop Loss Calculator

Three Ways to Set a Stop Loss

1. ATR multiple. The Average True Range measures how far a stock usually moves in a day. A stop 1.5 to 2 ATR below the entry sits outside normal noise. Read the ATR value from your charting platform.
2. Below support. Place the stop just under a support zone or the last higher low, with a small buffer so a brief dip does not take you out.
3. Percent below entry. A fixed percentage is simple, but it ignores the chart. Use it as a ceiling, not as the main reason for the stop.

The best stop is where the trade idea is clearly wrong. The method only helps you measure it.

The Stop Loss Formulas

With an entry at $50, an ATR of $1.20 and a 1.5 mul­ti­ple, the stop is $50 − $1.80 = $48.20. On a $10,000 account risking 1% ($100), that allows 55 shares, because $100 ÷ $1.80 rounds down to 55.

Once the stop is set, check the trade is worth it with the R:r calculator.

Common Stop Loss Mistakes

• Placing the stop on an obvious round number where many orders cluster.
• Setting the stop so tight that ordinary daily swings hit it.
• Moving the stop lower once the trade is open. A stop can rise with the trend; it should never be lowered.
• Buying more shares because the stop is close, without checking the chart.

Our stop before entry article explains why the stop always comes first in the plan.

What a Stop Loss Cannot Do

A stop order limits the planned loss, but it cannot stop price gaps. A stock can open below your stop after news, and the fill can be worse than the stop price. Keep posi­tion sizes small enough that a gap is painful, not fatal.