Stop Loss Distance Calculator
Most traders set stops arbitrarily — too tight and you get stopped out by noise, too wide and your position is too small. This calculator determines the optimal stop loss distance based on current volatility (ATR), support/resistance levels, and your risk tolerance — ensuring your stops are placed where they should be, not where you hope they'll work.
Works for all markets and timeframes. Uses volatility-adjusted stops (ATR-based) and technical levels to find the sweet spot between avoiding noise and maintaining proper position sizing.
Your planned entry price
Use ATR if available, otherwise use percentage volatility
Recent volatility percentage (e.g., 2% for daily swings)
Standard: 1.5-2x ATR (1.5 = tighter, 2 = wider)
Long = stop below entry, Short = stop above entry
Percentage of account to risk on this trade
Total trading capital
Key technical level (stop should be beyond this)
Stop Loss Distance
Recommended Stop Distance
3.00%
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Calculation Methodology
Stop loss distance determines position size and risk. This tool calculates optimal stop distance based on volatility and technical levels:
Key Insight: Stop distance and position size are inversely related. Wider stops = smaller positions (same risk). The optimal stop balances volatility (to avoid noise), support/resistance (to avoid technical levels), and your risk tolerance. Too tight = stopped out by noise. Too wide = position too small. This tool finds the sweet spot.
Learn more about stop losses:
Position sizing guideExample Scenario
Setup: $50,000 entry, 2% volatility, 1.5x multiplier, 1% risk, $10,000 account, Long position
What this means: With 2% volatility, a 3% stop (1.5x ATR) gives price room to move without getting stopped out by noise. This stop distance allows a $3,333 position while risking only $100 (1% of account).
Note: Always add 0.1-0.5% buffer for slippage. Set your actual stop at $48,350-$48,400 (3.2-3.3% from entry).
Common Mistakes & Warnings
- ⚠Setting stops too tight: Stops below 0.5% get hit by noise constantly. Use at least 1x ATR, preferably 1.5-2x. Tight stops don't protect you — they just guarantee losses.
- ⚠Ignoring support/resistance: Placing stops at arbitrary distances ignores key technical levels. Your stop should be beyond support (long) or resistance (short) to avoid getting stopped out by normal price action.
- ⚠Using wrong volatility: Daily volatility is different from hourly. Use ATR or volatility from the timeframe you're trading. A 1% stop on daily might be perfect, but 1% on 5-minute is way too tight.
- ⚠Not accounting for slippage: Stop orders can slip, especially in volatile markets. Add 0.1-0.5% buffer to your calculated stop distance. In low liquidity, use larger buffers.
- ⚠Forcing tighter stops for larger positions: If your calculated stop is 3% but you want a larger position, don't force it to 1.5%. You'll get stopped out. Accept the smaller position or find a better entry.
Example Scenarios
Try these realistic scenarios to understand stop loss distance in different market conditions.
Scenario 1: Low Volatility Market
Calm market with low volatility. Tighter stops are possible, allowing larger positions.
Step-by-Step Calculation:
- Volatility Stop: 1% × 1.5 = 1.5%
- Risk Amount: $10,000 × 1% = $100
- Position Size: $100 ÷ 1.5% = $6,667
- Stop Loss Price: $50,000 × (1 - 1.5%) = $49,250
- Units: $6,667 ÷ $50,000 = 0.1333 BTC
What this means: In a calm market (1% volatility), a 1.5% stop is appropriate. This allows a $6,667 position while risking only $100. The stop is tight enough to avoid noise but wide enough to give price room.
Scenario 2: High Volatility Market
Volatile market requiring wider stops. Position size naturally decreases.
Step-by-Step Calculation:
- Volatility Stop: 4% × 2 = 8%
- Risk Amount: $10,000 × 1% = $100
- Position Size: $100 ÷ 8% = $1,250
- Stop Loss Price: $50,000 × (1 - 8%) = $46,000
- Units: $1,250 ÷ $50,000 = 0.025 BTC
What this means: In a volatile market (4% volatility), an 8% stop is necessary to avoid noise. This reduces position size to $1,250 (same $100 risk). Wide stops in volatile markets are correct — don't force tighter stops.
Key Lesson: Volatility determines stop distance, which determines position size. You can't have both tight stops and large positions in volatile markets. Accept smaller positions or wait for calmer conditions.
Scenario 3: With Support/Resistance Level
Technical level is closer than volatility-based stop. Use the tighter stop.
Step-by-Step Calculation:
- Volatility Stop: 2% × 2 = 4%
- Support Distance: |($50,000 - $48,000) / $50,000| × 100 = 4%
- Recommended Stop: min(4%, 4%) = 4% (same in this case)
- Risk Amount: $10,000 × 1% = $100
- Position Size: $100 ÷ 4% = $2,500
- Stop Loss Price: $50,000 × (1 - 4%) = $48,000 (at support)
What this means: Support is at $48,000 (4% below entry). The volatility stop is also 4%, so they align perfectly. Your stop should be just below $48,000 (e.g., $47,900) to avoid getting stopped out by support bounces.
Pro Tip: If support is at 3% but volatility suggests 5%, use 3% (tighter). If support is at 6% but volatility suggests 4%, use 4% (tighter). Always use the tighter of the two.
What If Variations
Explore how changing parameters affects your stop distance and position size:
What if volatility increases from 2% to 4%?
Stop distance doubles (4% to 8% with 2x multiplier), position size halves (same risk). This is correct — volatile markets require wider stops and smaller positions.
What if I increase ATR multiplier from 1.5x to 2.5x?
Stop distance increases (e.g., 3% to 5%), position size decreases (same risk). Wider multiplier = more conservative, smaller positions, less likely to get stopped out.
What if support is closer than volatility stop?
Use the support-based stop (tighter). This gives you a larger position size but requires the stop to be placed correctly beyond support. Don't place stops at support — place them beyond it.
Frequently Asked Questions
Why is stop loss distance important?
Stop loss distance determines your position size and risk. Too tight stops get hit by noise, too wide stops require smaller positions. The optimal stop balances volatility, support/resistance, and your risk tolerance. This tool calculates the sweet spot.
Should I use ATR or percentage volatility?
ATR (Average True Range) is more accurate because it adapts to current market conditions. If you don't have ATR, use percentage volatility based on recent price swings. ATR is typically 1.5-2x for stops, while percentage volatility can vary by market.
How do support/resistance levels affect stop distance?
Support/resistance levels are key technical levels where price often reverses. Your stop should be placed beyond these levels to avoid getting stopped out by normal price action. This tool uses the tighter of volatility-based or support/resistance-based stops.
What's a good ATR multiplier?
1.5-2x ATR is standard for stop losses. 1.5x is tighter (more aggressive), 2x is wider (more conservative). In volatile markets, use 2-2.5x. In calm markets, 1.5x works well. Never go below 1x ATR — you'll get stopped out by noise.
What if my calculated stop distance seems too wide?
Wide stops are often correct — they account for volatility and prevent premature exits. If it feels too wide, check: (1) Is your volatility input accurate? (2) Are you in a volatile market? (3) Can you accept the smaller position size? Don't force tighter stops just to increase position size.
What if my calculated stop distance seems too tight?
Tight stops get hit by noise. If your stop is too tight, you're likely: (1) Using wrong volatility (too low), (2) Ignoring support/resistance, or (3) Trading in a volatile market. Widen your ATR multiplier or check your volatility input. Better to have a wider stop with smaller position than get stopped out constantly.
How does this relate to position sizing?
Stop distance and position size are inversely related. Wider stops = smaller positions (same risk). This tool calculates optimal stop distance first, then shows what position size that gives you. Use the Position Size Calculator if you already know your stop distance.
Should I adjust stops for different timeframes?
Yes — volatility varies by timeframe. Daily charts need wider stops than 1-hour charts. Use ATR or volatility from the timeframe you're trading. A 1% stop on daily might be perfect, but 1% on 5-minute is way too tight. Match your stop to your timeframe's volatility.
What about slippage and gaps?
Always add a buffer for slippage (0.1-0.5%) and gaps. If your calculated stop is 2%, consider setting it at 2.2-2.5% to account for execution issues. In volatile markets or low liquidity, use larger buffers. This tool shows the theoretical stop — add your buffer when placing the order.
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