TradingPlanTools

Stop Loss Calculator

Compare a stop derived from account risk with one derived from volatility, and see which is tighter.

Last reviewed

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Free · No sign-up · Runs in your browser

There are two defensible ways to place a stop and they answer different questions. A risk-based stop asks how far price can move before the loss exceeds what you decided to risk. A volatility-based stop asks how far price routinely moves before the idea is actually wrong.

This calculates both from the same entry and shows which is tighter. When the risk-based stop is the tighter of the two, the position is too large for the instrument’s normal movement - which is the most useful thing this comparison reveals.

Your numbers

Results update as you type. Nothing is sent anywhere.

Result

Risk-based stop

40

Volatility-based stop
40.6
Which is tighter
ATR-based stop
Risk budget
$500
Risk per unit
2.5
Risk-based stop distance
5.88%
Volatility stop distance
4.47%
Loss at the stop
$500

This tool is for informational and educational purposes only. It is not financial or investment advice, and past performance does not guarantee future results.

A risk-based stop answers "where do I have to exit to lose no more than X". An ATR-based stop answers "where is the market noise". They are different questions and often give different levels.

If the ATR stop is wider than the risk stop, the usual fix is a smaller position - not a tighter stop inside the noise.

How to use the stop loss calculator

  1. Enter the entry price, your account size and the risk percentage.
  2. Enter the position size you intend to take.
  3. Enter a volatility measure such as the ATR from your platform, and a multiple.
  4. If the risk-based stop is tighter, reduce the position rather than tightening the stop.

What people use this for

  • Checking whether a position size is compatible with normal price movement.
  • Placing a stop far enough away to survive ordinary noise.
  • Comparing two approaches to stop placement on the same trade.
  • Finding the maximum loss a stop implies before entering.

Worked examples

Every figure below is produced by running this calculator against the example inputs, so the numbers always match the tool.

A position sized comfortably for the volatility

Entry $42.50, $50,000 account, 1% risk, 200 units, ATR $0.95 at 2x.

Risk-based stop
40
Volatility-based stop
40.6
Which is tighter
ATR-based stop

A position too large for the instrument

The same trade at 400 units.

Risk-based stop
41.25
Which is tighter
Risk-based stop
Risk-based stop distance
2.94%

The comparison is the output

If the volatility-based stop is wider than the risk-based one, the position is sized such that ordinary movement in the instrument will stop you out. The fix is a smaller position, not a tighter stop.

Tightening the stop instead produces exactly the pattern most new traders experience: repeated small losses on trades where the original idea turned out to be correct.

Stops are placed where the idea is wrong

The correct location for a stop is the price at which the reason for the trade no longer holds. That level is determined by the chart and the thesis, not by what loss feels tolerable.

Position size is then the variable that makes that stop affordable. Reversing the order - choosing the size and then finding a stop that fits - is the single most common structural error in retail trading.

The volatility measure comes from your platform

This tool has no price data and does not calculate ATR. Enter the value your charting software gives you, along with whatever multiple your approach uses.

Larger multiples produce wider stops and smaller positions for the same risk. Neither is inherently better, and the right multiple depends on the timeframe and the strategy.

Methodology and assumptions

What this calculator does, and what it deliberately does not do.

  • Results are arithmetic on the numbers you enter. Nothing here predicts prices or connects to an exchange, broker or market data feed.
  • Nothing you type is transmitted or stored - the calculation runs entirely inside your browser.

This tool is for informational and educational purposes only and does not constitute financial or investment advice. Past performance does not guarantee future results.

Nothing on this website is a recommendation to buy, sell or hold any security, currency, derivative or digital asset. No price is predicted and no return is promised or implied.

Trading and investing carry the risk of substantial loss, including the loss of your entire capital. Leveraged products can produce losses that exceed your deposit. Tax treatment depends on your jurisdiction and your circumstances.

Frequently asked questions

Which stop should I use?

Generally the wider of the two, with position size reduced so it fits the risk budget. A stop inside normal movement will be hit by noise.

What ATR multiple is right?

It depends on the timeframe and strategy, and this site does not suggest one. Shorter timeframes typically use smaller multiples.

Should I ever move a stop?

In the direction of the trade, as part of a plan decided in advance - commonly. Away from the entry to avoid being stopped out - that is how small losses become large ones.

Does this calculate ATR?

No. It has no price data. Enter the value from your charting platform.

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