How to calculate stop loss and take profit
Your stop-loss price is your entry moved against your position by the stop-loss percentage; your take-profit is your entry moved in your favour. For a long position the formulas are:
Stop-loss = entry × (1 − stop% / 100)
Take-profit = entry × (1 + target% / 100)
For a short position the signs flip — your stop sits above entry and your target below — so stop = entry × (1 + stop% / 100) and take-profit = entry × (1 − target% / 100). The dollar at risk is your stop distance × quantity (× contract multiplier for futures), and the dollar reward is your target distance × quantity.
Worked example
You go long at $100 with a 5% stop and a
10% target.
Stop-loss = 100 × (1 − 0.05) = $95.
Take-profit = 100 × (1 + 0.10) = $110.
Risk per share = $5, reward per share = $10, so the R:R ratio is
2 : 1.
Working in R-multiples
An R-multiple expresses your target as a multiple of your risk. Your risk (1R) is the distance from entry to your stop. Switch to R-multiple mode and enter a value like 2 to place your take-profit twice as far from entry as your stop — a 2R target. This keeps reward consistent relative to risk across every instrument and price, which is why most systematic traders size targets in R rather than raw percentages.
Frequently asked questions
- How do you calculate a stop-loss price?
- Take your entry price and move it against your position by the stop-loss percentage. For a long: stop = entry × (1 − stop% / 100). For a short the stop sits above entry: stop = entry × (1 + stop% / 100). Enter at $100 with a 5% stop and your stop-loss price is $95 on a long.
- How is the take-profit price calculated?
- In percent mode, the take-profit is your entry moved in your favour by the take-profit percentage — entry $100 with a 10% target gives $110 on a long. In R-multiple mode, the target is your stop distance multiplied by your chosen R (for example 2R means the reward is twice the risk).
- What is an R-multiple?
- R is your risk — the distance from entry to your stop. A 2R target means you are aiming to make twice what you would lose if stopped out. Framing targets in R keeps your reward consistent relative to risk regardless of the instrument or price.
- Can I use it for crypto and futures?
- Yes. Crypto supports fractional quantities and small decimal prices. For futures, set the contract multiplier (for example 50 for the E-mini S&P 500) so the dollar at risk and dollar reward are correct. Forex is coming soon.