What is Breakeven stop?
Zararsizlik stopi
In short
Moving the stop to the entry price once the trade is in profit. It removes the loss, but done too early a normal pullback closes the trade at 0R.
Also known as: breakeven, BE
A breakeven stop means moving your stop-loss to the entry price once the trade has moved far enough into profit. From then on the worst case is closing at 0R (before commissions) — the risk of a loss is removed.
When to move it
Common rules:
- once price has moved +1R or more;
- once the first part is closed (scaling out);
- once a new swing low forms above the entry — the most "natural" approach.
The main risk: moving it too early
Price almost never moves in a straight line. A normal pullback often comes back to the entry price. Move the stop too early and the trade closes at 0R, then price heads for the target. Lots of "breakeven" exits drag your statistics down: winners shrink while losers still happen.
Important nuances
- To cover commission and slippage, the stop can sit slightly above the entry.
- On a gap open, the stop price isn't guaranteed.
- A position protected by a breakeven stop adds 0 to your portfolio heat, freeing room for a new trade.
Entry $40, stop $38.80 (1R = $1.20). After price reached $41.50 (+1.25R) the stop was moved to $40. A normal pullback to $39.80 took it out — result 0R. With the original stop in place, price would have reached the $43.60 target (+3R).
Example
Entry $60, stop $57 (1R = $3), target $69 (+3R) — illustrative.
Moving too early: price reached $63.50 (a bit over +1R) and the trader moved the stop to $60. Price then pulled back to $59.80 — stop hit, result 0R. A week later price reached $69: a missed +3R.
A more patient rule: move the stop only after a new swing low forms above the entry. In this case the stop would still have been at $57 when price dipped to $59.80, and the trade would have closed at +3R. Of course, had price fallen to $57 the result would be −1R — every rule has its cost.
Mistakes and tips
Don't move the stop before +1R, or ordinary noise will shake you out of the trade.
Move it based on structure, not price alone: a new swing low above the entry is a more reliable cue.
Count your 0R exits separately in the journal: if many of them later reached the target, your rule is too tight.
Frequently asked questions
- When should you move your stop to breakeven?
- Usually after price has moved at least +1R, or once a new swing low forms above the entry. Moving it too early closes many good trades at 0R.
- Does a breakeven stop completely remove the risk of loss?
- Almost: a gap open can fill you below the stop, and there are commissions. That's why some traders place it a few cents above the entry.
Learn it in the Academy
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