Stop loss calculator
A stop turns an open-ended risk into a number you chose ahead of time. Set the distance three common ways and see where the stop lands, what it would cost and how many shares fit the loss you accept.
Stop price
$92.00
Sell if the price falls here
- Loss per share
- $8.00
- 8% of the entry price
- Total loss at the stop
- $800.00
- Shares that fit your limit
- 62
- Gain needed to recover
- 8.7%
For education only, not investment advice. Results are estimates based on what you enter, and they leave out anything not shown, such as slippage and most taxes. Check the numbers with your broker or a licensed professional before acting on them.
The formula
- Percent stop (long)
- entry x (1 - stop %)
- Dollar stop (long)
- entry - dollars per share
- ATR stop (long)
- entry - (ATR x multiple)
- Short trades
- add the distance to the entry instead
Worked example
You buy 100 shares at $100 with an 8% stop, and you do not want to lose more than $500.
- Stop price: $100 x (1 - 8%) = $92.00
- Loss per share: $100 - $92.00 = $8.00
- Total loss: 100 x $8.00 = $800.00
- Shares that fit $500: $500 / $8.00 = 62
A hit on the $92.00 stop costs $800.00, which is over your $500 limit, so 62 shares is the size that fits. Getting back to $100 from the stop would take a gain of 8.7%. With an ATR of $2.50 and a 2x multiple, the stop would be $95.00 instead.
Choosing a method
A percentage stop is simple and easy to apply to anything, but it ignores how much the stock normally moves. An 8% stop is wide for a utility and tight for a biotech. A dollar stop suits a level you read off a chart, such as just under a prior low.
An ATR stop scales with volatility. Average true range measures how far a stock typically travels in a day, usually over 14 days, and your charting platform will show it. Two times ATR gives the stock room for a normal couple of days without tying the stop to a fixed percentage.
A stop price is not a guaranteed fill
A stop market order becomes a market order once the price trades at your level, and it fills at the next available price. If a stock gaps down overnight on bad news, the fill can be well below the stop. A stop limit order avoids a bad fill but may not fill at all, leaving you in a falling stock.
Frequently asked questions
How far should a stop loss be?
It should sit where the reason for the trade stops being true, while leaving room for the stock's normal movement. Comparing the distance with the stock's ATR is a quick way to check that it is not inside ordinary daily noise.
What is a good ATR multiple?
Traders commonly use between 1.5 and 3. A smaller multiple exits sooner and gets stopped out more often, while a larger one sits through more movement and needs a smaller position for the same dollar risk.
Why is the recovery gain bigger than the loss?
The gain is calculated on a smaller balance. Falling 8% from $100 leaves $92, and $8 is about 8.7% of $92. The gap widens quickly as losses grow, and a 50% loss needs a 100% gain.
Should stops be used before earnings?
A stop can't protect against a gap at the open, and earnings reports usually come outside regular hours. Some traders reduce size or exit ahead of a report rather than count on a stop.