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Stop Loss Calculator

Calculate optimal stop loss placement

Many traders use 3% for swing trading, 1-2% for day trading

Understanding Stop Losses

A stop loss is commonly used as a risk management tool. It defines the price at which traders typically exit if the trade moves against them.

⚠️ Trading Without Stops

Historical data suggests that losses without predetermined exit points can average -25% to -40%. Many traders find that one large loss can offset multiple winning trades.

✅ Trading With Stops

Traders using a 3% stop loss typically see losses average around -3%. This approach allows for approximately 33 consecutive losses before account depletion.

Common Stop Loss Approaches:

  • • Swing Trading: Many traders use 3-5% stops
  • • Day Trading: Traders often use 1-2% stops
  • • Volatile Stocks: Some traders prefer wider stops (4-6%)
  • • Blue Chips: Tighter stops (2-3%) are commonly used

Note: These are educational examples only. Individual risk tolerance varies.

Example Calculation

Scenario: $10,000 account, buying stock at $150, risking 1% ($100).

Entry Price: $150
3% Stop Loss: $150 × 0.97 = $145.50
Risk per Share: $150 - $145.50 = $4.50
→ Shares to Buy: $100 ÷ $4.50 = 22 shares
→ Total Investment: 22 × $150 = $3,300
→ If stopped out: Loss of $99 (1% of account)

This example demonstrates how traders calculate position size based on predetermined risk. For educational purposes only.

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