Break-Even
The price at which a trade neither profits nor loses — or the point at which a stop is moved to entry cost after partial gains.
Break-even has two related uses in trading. First, it is the exact price at which total revenue equals total cost (no profit, no loss). Second — and more practically — it describes the tactic of moving a stop-loss to the entry price once a trade has moved sufficiently in your favour, removing the financial risk from the trade.
"Moving to break-even" is psychologically powerful but must be applied carefully: moving stops too quickly increases the chance of being stopped out before the full target is reached, reducing overall expectancy.
Example
Long at $50, stop at $47, target $56. Price reaches $53 (halfway). You move the stop to $50 (break-even). Now the worst outcome is a scratch — but if price reverses to $50.01 before reaching $56, you exit with zero profit where the system would have expected to gain.
Related Terms
Asymmetric Risk
A trade or strategy where the potential reward significantly outweighs the potential loss — the core of every high-quality setup.
IntermediateRisk-Reward Ratio
The ratio of potential profit to potential loss on a single trade. A 1:2 R:R means you risk $1 to make $2.
BeginnerScaling Out
Exiting a position in pieces as price advances, locking in partial profits while letting the remainder run toward a larger target.
IntermediateStop-Loss
A pre-set price level at which a losing trade is closed to cap the damage before it grows larger.
BeginnerTake-Profit
A target price at which a winning trade is automatically closed to lock in gains before a reversal can erode them.
Beginner