How to Calculate Stop-Loss Percentage

A stop-loss percentage tells you how far your planned stop is from your entry price.

If you buy a stock at $100 and plan to exit at $95, your stop-loss distance is 5%.

For a long position:

Stop-loss percentage
= (Entry price − Stop price) ÷ Entry price × 100

Example:

Entry price = $100
Stop price = $95

Stop-loss percentage
= ($100 − $95) ÷ $100 × 100
= 5%

For a short position, the stop is above the entry price, so the calculation is reversed:

Stop-loss percentage
= (Stop price − Entry price) ÷ Entry price × 100

A stop-loss percentage is useful for comparing risk across trades, but it does not tell you how much of your account you are risking. That depends on your position size.

For a long position:

Stop-loss %
= (Entry − Stop) ÷ Entry × 100

For a short position:

Stop-loss %
= (Stop − Entry) ÷ Entry × 100

You can also use a direction-neutral version:

Stop-loss %
= |Entry − Stop| ÷ Entry × 100

The absolute value gives you the percentage distance between the two prices.

Example: 4% Stop-Loss

Suppose you enter a stock at $50 and place the stop at $48.

Price difference
= $50 − $48
= $2

Stop-loss percentage
= $2 ÷ $50 × 100
= 4%

Your planned stop is 4% below your entry price.

Example: 7.5% Stop-Loss

Suppose:

Entry = $80
Stop = $74

Then:

Stop-loss percentage
= ($80 − $74) ÷ $80 × 100
= 7.5%

The stop is 7.5% below the entry.

Sometimes you already know the percentage distance you want and need to calculate the actual stop price.

For a long position:

Stop price
= Entry price × (1 − Stop-loss %)

The percentage must be converted into decimal form.

For example, 5% becomes 0.05.

If your entry price is $120 and you want a 5% stop:

Stop price
= $120 × (1 − 0.05)
= $114

So a 5% stop from a $120 entry is $114.

Common Stop-Loss Percentage Examples

The percentage may be the same, but the dollar risk per share changes with the stock price.

For a short trade, the planned stop is normally above the entry price.

The formula becomes:

Stop price
= Entry price × (1 + Stop-loss %)

Suppose you short a stock at $50 and want the stop 4% above the entry:

Stop price
= $50 × (1 + 0.04)
= $52

The distance between the entry and stop is:

$52 − $50 = $2 per share

And:

$2 ÷ $50 × 100 = 4%

So the stop-loss distance is 4%.

This distinction matters.

A 5% stop-loss does not mean you are risking 5% of your account.

Stop-loss percentage measures the distance between your entry and stop.

Account risk measures how much money you could lose relative to the size of your account.

Consider two traders using the same trade:

Entry = $100
Stop = $95
Stop distance = 5%

Trader A buys 10 shares.

10 × $5
= $50 planned price risk

Trader B buys 200 shares.

200 × $5
= $1,000 planned price risk

They both use the same 5% stop, but their total risk is very different.

This is why stop distance and position size should be considered together.

Once you know the entry and stop, you can calculate the risk per share:

Risk per share
= |Entry price − Stop price|

Then:

Position size
= Maximum risk amount ÷ Risk per share

Suppose you have:

Account size = $10,000
Maximum risk per trade = 1%
Entry = $50
Stop = $47.50

First calculate the stop-loss percentage:

($50 − $47.50) ÷ $50 × 100
= 5%

The maximum dollar risk is:

$10,000 × 1%
= $100

Risk per share is:

$50 − $47.50
= $2.50

Position size is therefore:

$100 ÷ $2.50
= 40 shares

The planned position is 40 shares before considering fees, slippage, capital limits, or other trading constraints.

Use the BasisPilot Position Size Calculator to calculate this directly.

There is no percentage that is automatically correct for every stock or trade.

A 2% move can be significant for one security and ordinary daily volatility for another.

For example, a stock that typically moves less than 1% per day behaves very differently from a highly volatile stock that regularly moves 5% or more.

A stop can be based on several different approaches.

Fixed Percentage

A trader may decide to use a fixed percentage such as 3%, 5%, or 8%.

This is easy to calculate and apply consistently.

The limitation is that a fixed percentage ignores differences in volatility and market structure.

Technical Level

A stop may instead be placed beyond a level that would invalidate the trade idea, such as:

• a previous swing low;
• a previous swing high;
• support or resistance;
• a breakout level;
• a trend boundary.

The resulting stop-loss percentage is then calculated after the price level has been selected.

For example:

Entry = $75
Planned stop = $70.50

The percentage distance is:

($75 − $70.50) ÷ $75 × 100
= 6%

In this case, the 6% is the result of the selected stop level rather than the reason for choosing it.

Volatility-Based Stop

Some traders use volatility measures such as Average True Range (ATR) to estimate how much a security normally moves.

For example:

Entry = $100
ATR = $2
Selected distance = 2 × ATR

Stop distance
= $4

For a long trade:

Stop = $96

The equivalent percentage is:

($100 − $96) ÷ $100 × 100
= 4%

Using volatility does not eliminate risk, but it avoids assuming that the same percentage distance behaves identically across every stock.

Suppose your maximum planned loss is fixed at $100.

Trade A has a $2 stop distance:

$100 ÷ $2
= 50 shares

Trade B has a $5 stop distance:

$100 ÷ $5
= 20 shares

The second trade has a much wider stop, but both trades have the same planned price risk:

Trade A:
50 × $2 = $100

Trade B:
20 × $5 = $100

The position size adjusts to compensate for the wider stop.

This is the key relationship:

Wider stop
→ Smaller position

Narrower stop
→ Larger position

provided the maximum risk amount stays the same.

A narrower stop lowers the dollar risk per share.

Mathematically, that allows a larger position.

Suppose:

Maximum risk = $100
Entry = $50

With a $2 stop distance:

$100 ÷ $2
= 50 shares

With a $0.50 stop distance:

$100 ÷ $0.50
= 200 shares

The second trade still appears to risk only $100.

But that calculation assumes the position can actually exit around the planned stop price.

A very tight stop may be triggered by ordinary price movement, and a larger position increases sensitivity to slippage, gaps, fees, and execution.

A smaller stop percentage is therefore not automatically safer.

A stop-loss calculation uses a planned price.

The actual execution price can be different.

For example, suppose:

Entry = $100
Planned stop = $95

The calculated stop-loss percentage is 5%.

But if the stock gaps from $97 to $92, an order triggered around $95 may execute below the planned price.

An exit at $92 would represent:

($100 − $92) ÷ $100 × 100
= 8%

That is larger than the original 5% planned distance.

Liquidity, market gaps, volatility, and order type can all affect execution.

A stop price should therefore be treated as a risk-planning input, not a guarantee of maximum loss.

These two calculations can look similar but describe different things.

Stop-Loss Percentage

Before or during a trade:

(Entry − Planned stop) ÷ Entry × 100

This measures your planned stop distance.

Actual Percentage Loss

After exiting:

(Entry − Exit price) ÷ Entry × 100

This measures what actually happened to the position price.

If you entered at $100, planned a stop at $95, but exited at $94:

Planned stop-loss distance = 5%

Actual price loss = 6%

Keeping the two numbers separate makes post-trade analysis more useful.

Instead of starting with an arbitrary number of shares, use the trade structure and risk budget together.

A simple process is:

1. Choose the planned entry price.
2. Identify the price where the trade idea is no longer valid.
3. Set the planned stop.
4. Calculate the stop-loss percentage.
5. Calculate the dollar risk per share.
6. Set the maximum amount of account risk.
7. Calculate the position size.
8. Check whether fees, slippage, gaps, or capital limits materially change the result.
9. Round the position down if necessary.

For a deeper look at the relationship between these steps, see Position Size vs Stop-Loss: Which Should You Calculate First?.

How do I calculate stop-loss percentage?

For a long trade:

(Entry price − Stop price) ÷ Entry price × 100

If you enter at $100 and set a stop at $94:

($100 − $94) ÷ $100 × 100
= 6%

Your stop is 6% below your entry.

What price is a 5% stop-loss?

For a long position:

Stop price
= Entry × 0.95

At a $100 entry, a 5% stop is $95.

At a $50 entry, it is $47.50.

At a $200 entry, it is $190.

What price is a 10% stop-loss?

For a long position:

Stop price
= Entry × 0.90

A $100 entry therefore produces a $90 stop.

Is a 5% stop-loss good?

It depends on the security, volatility, strategy, and reason for entering the trade. A fixed 5% distance can be reasonable under one set of conditions and poorly matched to another.

The percentage itself does not determine whether a stop is appropriate.

Is a 1% account risk the same as a 1% stop-loss?

No.

A 1% stop means the stop price is 1% away from the entry.

A 1% account-risk limit means the planned loss represents 1% of the account.

Position size connects the two.

Can I lose more than my stop-loss percentage?

Yes.

A stop price does not guarantee execution at that exact price. Gaps, fast markets, limited liquidity, and slippage can cause the actual exit to occur at a less favorable price.

Should I choose the stop percentage before the position size?

In a risk-based workflow, the trade's entry and invalidation level usually come first. Once the stop distance is known, position size can be calculated from the maximum amount you are willing to risk.

The stop-loss percentage formula is straightforward:

Stop-loss %
= |Entry − Stop| ÷ Entry × 100

But the percentage is only one part of risk management.

A 5% stop on 10 shares and a 5% stop on 1,000 shares do not create the same account risk.

A more useful sequence is:

Entry
→ Planned stop
→ Stop-loss percentage
→ Risk per share
→ Maximum account risk
→ Position size

That keeps the stop connected to the trade and the position size connected to the amount of money at risk.