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Risk ManagementInteractive

Stop Distance

The gap between your entry and your stop loss — your risk on a single unit.

Also called: risk per share · stop width · risk per unit

In plain language

Stop distance is the per-share, per-contract or per-coin version of your risk. For a long it is entry minus stop; for a short it is stop minus entry.

It is the denominator in the position size formula, which makes it the most leveraged number in your trade plan. Halving the stop distance doubles the correct position size at identical dollar risk.

Expressed as a percentage of entry, it also tells you how much room the trade has relative to the instrument’s normal movement.

The formula

Stop Distance

Entry − Stop (long) · Stop − Entry (short)

As a percentage
Stop Distance ÷ Entry × 100

Change the numbers

This is the concept as a working tool. Edit any field and watch what moves — that relationship is the thing worth remembering.

Try it yourself
Direction
Stop Distance
$2
As % Of Entry
4%
Shares For That Risk
50

Halve the stop distance and the share count doubles. Your dollar risk stays at $100 either way — the position just gets more sensitive to each cent of movement.

Size a full trade around this stop

Seen on a chart

A long trade with the entry above the stop loss, and the risk measured between themRISKENTRY$50.00STOP$48.00$2.00Long trade — price falling is the losing direction
The distance between entry and stop is your risk per share. Divide your risk budget by it and you have your position size.

Why it matters

Every dollar figure in your trade — position size, position value, exposure — is derived from this one distance. Getting it wrong scales the error through everything else.

Common mistakes

  • Setting stop distance from a desired position size, which reverses the logic.
  • Using the same distance across instruments with very different volatility.
  • Placing the stop inside the instrument’s normal daily range and calling it precision.

Put it to work

Turn a stop into a position size

Keep exploring

These concepts are connected. Understanding one usually makes the next one easier.

Stop LossOrders

A predefined exit that closes a losing trade before the loss becomes serious.

Position SizeRisk Management

The amount of an asset you buy or sell in a single trade.

ATRIndicators

The average size of an instrument’s price range per period, including gaps.

Volatility-Based StopRisk Management

A stop placed at a multiple of the instrument’s Average True Range rather than a fixed percentage.

VolatilityBasics

How much and how quickly an asset’s price moves over a given period.