Stop Loss Calculator — Free Online Risk Management Tool
Last updated: April 20266 min readCalculator Tools
A stop loss without position sizing is incomplete. Knowing "I will exit at $95" is not enough — you also need to know how many shares to buy so that the $5 drop to your stop only costs you 1% of your account, not 10%. Position size and stop loss are two halves of the same risk equation.
The Relationship Between Stop Loss and Position Size
A wider stop loss means fewer shares. A tighter stop loss means more shares. The dollar risk stays the same:
| Entry Price | Stop Loss | Distance | Shares (at $500 risk) | Position Value |
|---|
| $100 | $99 (tight) | $1.00 | 500 shares | $50,000 |
| $100 | $97 (medium) | $3.00 | 166 shares | $16,600 |
| $100 | $95 (wide) | $5.00 | 100 shares | $10,000 |
| $100 | $90 (very wide) | $10.00 | 50 shares | $5,000 |
In every row, the dollar risk is $500. The stop loss distance determines how many shares you can buy. This is why the calculator needs both your entry price AND your stop loss price.
Where to Place Stop Losses
Stop losses should be placed where your trade idea is proven wrong — not at arbitrary distances:
- Below support levels: If a stock bounces off $45 three times, your stop goes below $45 (e.g., $44.50). If price breaks that support, your thesis is wrong
- Below moving averages: If you bought because price is above the 50-day moving average at $72, your stop goes just below $72. Price crossing below the MA changes the setup
- Below recent swing lows: A swing low represents a level where buyers stepped in. Placing your stop below that level means your exit triggers only if buyers fail to hold
- Using ATR (Average True Range): Place stops 1.5-2x the ATR below entry. If ATR is $2, stop goes $3-$4 below entry. This accounts for normal daily volatility
Stop Loss Mistakes
- Too tight: A stop 0.5% below entry gets triggered by normal price noise. The stock drops $0.50 in regular trading, takes you out, then rallies $5. Your thesis was right, but your stop was too close
- Too wide: A stop 15% below entry means a massive loss if triggered. Wide stops require tiny position sizes, making the trade not worth taking
- No stop at all: "I will just watch it." You will not. You will freeze when the stock drops 20% and convince yourself it will come back. It might not
- Moving stops further away: You set a stop at $95, price drops to $95.10, and you move your stop to $93 "to give it more room." You just doubled your risk without adjusting your position size
Stop Loss + Position Size Workflow
- Analyze the chart: Find your entry level and identify where your thesis breaks (that is your stop loss)
- Measure the distance: Entry minus stop loss = risk per share
- Check the risk/reward: Is the potential profit at least 2x the risk? If not, skip the trade
- Calculate position size: Dollar risk / risk per share = shares to buy
- Execute: Buy the calculated number of shares and set your stop loss immediately
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