Stop Loss & Take Profit Calculator

Why Stop Losses Are Non-Negotiable

Every professional trader uses a stop loss on every trade. A stop loss is a predefined exit point where you close a losing trade before a small loss becomes a devastating one. The golden rule: cut losses short, let winners run. Without a stop loss, one bad trade can wipe out weeks of gains.

The Formulas

Long Trade (Buying):

• Stop Loss Price = Entry Price × (1 − Stop Loss %)
• Take Profit Price = Entry Price × (1 + Take Profit %)

Short Trade (Selling):

• Stop Loss Price = Entry Price × (1 + Stop Loss %)
• Take Profit Price = Entry Price × (1 − Take Profit %)

Dollar Risk:

• Dollar Risk = |Entry Price − Stop Loss Price| × Shares
• Dollar Reward = |Take Profit Price − Entry Price| × Shares

Risk-to-Reward Ratio:

• R:R = Take Profit % ÷ Stop Loss %

ATR-Based Stops

Many professionals set stops using the Average True Range (ATR), a measure of how much an instrument typically moves in a day. The common rule is to place the stop 1.5× to 2× the ATR below entry on a long, or above it on a short. The point is to sit outside the range of ordinary daily noise, so that being stopped out means something actually changed rather than that Tuesday happened.

Worked through: a stock at $50 with a daily ATR of $1.20, using a 2× multiple, gives a stop $2.40 away at $47.60, which is a 4.80% stop. The same 2× rule on a quiet utility with a $0.30 ATR gives a 1.2% stop. That is the entire argument for ATR stops in one comparison. A fixed 2% would be far too tight on the first and needlessly wide on the second, and neither number knows anything about the instrument.

Enter an ATR and a multiple in the optional fields and the calculator converts it into the stop percentage for you.

The 1:2 Minimum R:R Rule

Most successful traders require a minimum 1:2 risk-to-reward ratio, meaning for every $1 risked they aim to make at least $2. The break-even win rate is 1 ÷ (1 + R), so a 1:2 setup breaks even at 33.3% and anything above that makes money.

Those are the exact break-even points, not targets. Winning at precisely the break-even rate leaves you flat before costs and losing after them, so treat the figure as the floor you have to clear rather than the bar you are aiming at.

Trailing Stops

A trailing stop moves with the price as it goes in your favor, locking in profits. For example, a 5% trailing stop on a stock that rises from $50 to $60 would move the stop from $47.50 to $57, protecting $7 of the $10 gain.

Worked Example

• Entry price: $50.00 (long)
• Stop loss: 2% → Stop price = $50 × (1 − 0.02) = $49.00
• Take profit: 4% → Target price = $50 × (1 + 0.04) = $52.00
• Position: 100 shares
• Dollar risk: ($50 − $49) × 100 = $100
• Dollar reward: ($52 − $50) × 100 = $200
• R:R ratio: 4% ÷ 2% = 1:2 ✓

Pro Tips

• Never move a stop loss further away from entry once a trade is open (widening losses).
• Always set your stop before entering a trade. Decide the exit before the entry.
• Account for spread and commissions when calculating real break-even levels.
• Volatility matters: a 2% stop on a calm blue-chip stock is very different from a 2% stop on a volatile small-cap.