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
Written by Javier Sánchez Ros
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
Worked through
The same $500 risk at three different stop distances
- Stop $0.40 away
- 1,250 shares
- Stop $1.00 away
- 500 shares
- Stop $2.50 away
- 200 shares
- Risk in every case
- $500
Three completely different positions, identical risk. Stop distance and position size move in opposite directions, and their product is the one number you actually chose.
This is why "a wide stop is risky" is wrong as usually meant. A wide stop is not riskier; it is smaller. The risk only grows if the size stays the same while the stop moves out, which is what happens when size is decided first.
It also removes the false choice between giving a trade room and keeping risk small. You can do both — the price is a smaller position, not a larger loss. The real cost of a wide stop is that the move has to travel further to pay the same amount, which is a question about the target, not about the risk.
Two details decide whether the distance you used is the distance you get. The stop belongs where the idea is disproved — beyond the level, not at it — and slippage means the fill is usually a little worse than the trigger. Both argue for measuring honestly rather than shaving the distance to justify a bigger position.
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.
- 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 stopSeen on a chart
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
Keep exploring
These concepts are connected. Understanding one usually makes the next one easier.
A predefined exit that closes a losing trade before the loss becomes serious.
The amount of an asset you buy or sell in a single trade.
The average size of an instrument’s price range per period, including gaps.
A stop placed at a multiple of the instrument’s Average True Range rather than a fixed percentage.
How much and how quickly an asset’s price moves over a given period.